In March of 2018, Spotify CEO Daniel Ek stated, “Our mission is to enable one million artists to live off their work.”
Ek also noted that over 20,000 artists on Spotify were currently amongst what he referred to as the “top tier” of revenue generation.
With over three million artists on Spotify, this high-earning bracket equates to less than 1% of all artists on the service. That said, Ek’s aspiration of ensuring more musicians earn a living on Spotify appears to be taking shape.
To better understand what is taking place in the world of music streaming, take a look at this graph from BuzzAngle’s newly-issued 2018 industry report:
There are a few key things to notice here, some of which appear troubling at first, but all of which ultimately amount to significant progress in the ability of independent artists to make a living from streaming music royalties. The first thing worth noting, and certainly the most concerning at face-value, is that the top 500,000 tracks on audio streaming services amount to 92.4% of all plays in the 2018 calendar year.
While this is initially disheartening, it’s important to notice that the total number of U.S.-based streams for those top 500,000 tracks increased sharply by a whopping 41.8%, a massive jump in terms of overall streaming revenue generated for rights holders.
Furthermore, in 2017, the remainder of music on the platform (music outside the top 500,000 tracks) made up only 6.4% of the total market share, whereas that same remainder made up over 7.6% of the total market share in 2018.
While this may seem like a very minute increase, a rise of 1.2% market share totaling 36 billion additional streams is no laughing matter, not to mention the fact that this same pattern is mirrored even more drastically across all of the higher-earning revenue tiers (Top 500, Top 5,000, etc.).
What these numbers mean for artists is that the remaining (tracks performing below the top 500,000) were streamed approximately 24 billion times in 2017, increasing to over 40 billion U.S.-based streams in 2018.
Another key metric is that in 2017, the United States' top 500,000 tracks generated 14.6 times as many audio streams as every other piece of music on the platform. In 2018, however, this multiple decreased significantly to only 12.2x.
While one year of data is certainly no sure indication of change, it does reveal a striking trend that should be a source of great hope for independent artists and labels everywhere.
"My ambition is we want artists to be able to afford to create the music they want to create, and if it takes them five years to sit down and make the album they want to make, they should be able to afford that," said Ek. "*That's my goal."
These numbers hint at an even more important trend – one which, as we climb further towards the top of the blockbuster hit charts, becomes surprisingly more pronounced, especially as you follow it towards the top of the charts, or into the "Top 50 Tracks" bracket. BuzzAngle reports that the top 50 tracks in 2017 generated 14.7 billion streams, making up 3.9% of the total streams on the platform. In 2018 this number dropped off massively with the top 50 tracks claiming just 0.7% of the market share, or only 3.74 billion plays.
This top bracket of earners is where the biggest change is taking place, and as they say, change starts from the top. While on-demand audio streaming volume grew by over 41% in 2018, the percentage of those plays dedicated to the top 50 tracks dropped by a staggering 74.6% - this is assuredly indicative of a noteworthy collapse in the industry-dominating power of major label mega hits.
When you look at the numbers from this perspective, you’ll notice that almost the entirety of the significant growth in US-based audio streams from 2017 to 2018 came from outside the top 500 tracks (and there are far less than 500 mega-hits per year). In layman's terms, this means that the vast majority of year-over-year growth came not from major artists, but from creators well-below the top tiers of hitmakers.
To put this into perspective, only 9 songs in 2018 were streamed more than 500 million times, compared to 16 in 2017.
From this data, BuzzAngle concludes that “Consumers are exercising their choice to explore new music, which is a terrific sign for the industry.”
It’s undeniable that major labels have attempted to replicate their nearly century-long dominance over terrestrial radio, but it’s proven to be all but impossible to achieve comparable results. The internet simply isn’t conducive to the type of captive audience once offered by radio, and now that consumers are used to having the power of choice, we may have passed the point of no return.
H/T - Music Business Worldwide