IFPI has launched its Global Music Report with a positive result for all regions of the world as streaming and physical both posted revenue increases.
As usual, IFPI gathered an array of international execs to dig into the report and address some of the big subjects for the industry.
While there has been a lot of debate about the impact of AI, Sony Music’s Dennis Kooker came back to the essential point for the industry: “Growth over the next few years is still going to depend primarily on our ability to expand paid subscription in creative ways, and bring more customers and music lovers into paying platforms.”
Here, Music Week rounds up the key talking points at a potentially transformative moment for the industry…
TIKTOK AND SHORT FORM VIDEO REVENUE
The backdrop to the report was, of course, UMG’s licensing dispute with TikTok that saw the major’s repertoire taken down from the platform.
Dennis Kooker, president, global digital business, at Sony Music, sounded a warning note with his opening remarks about “short clip video platforms that have no chance to lead to paid subscription and become primary consumption platforms for many of the young consumers”.
While that’s not a specific comment about TikTok, there’s a growing awareness that short form video has won over younger music fans (based on IFPI’s own research) who are not using paid subscription services.
A question in the room about a potential US ban of TikTok (at least under its current ownership) was deemed to be outside the remit of the Global Music Report, and (understandably) UMG execs did not join the debate on that one.
Growth over the next few years is still going to depend primarily on our ability to expand paid subscription in creative ways
Dennis Kooker
But returning to his theme, Sony’s Dennis Kooker honed in on the issues for recorded music from the rise of short form video.
“I think the challenge with short clip video is that it is an ad-supported only product and it's still a very young product in the market,” he said. “As a result, I think that everyone is struggling with how to monetise it properly.
“The key is recognising that and then putting a strategy around it… Ultimately what we want to see is better monetisation on the core product itself. But then also something that leads to even better [streaming] economics, in particular, leading to paid subscription. If you look at the last nine years, I've been up here before talking about this: the ad-supported and free tier’s main purpose is to introduce people to music and drive them into paid [streaming subscriptions]. If we can’t convince people to pay for music, that's problematic. And if certain services start to pull people away [from music] from a consumer attention standpoint, in time that's problematic for us as well.”
GENERATIVE AI AND TOOLS FOR ARTISTS
Universal Music has been on the front foot in terms of addressing generative AI in music, including an announcement this week about a partnership with Roland Corporation on key principles to protect artists.
“Let's be clear, though, the music industry has already embraced AI, as we have with every other significant technological advance in recent memory,” pointed out Adam Granite, executive vice president, market development, Universal Music Group.
“We believe it's perfectly possible to develop and adopt AI technology while also ensuring artists rights are protected. Collaboration between creative and tech companies should be the way to develop ethical application of this technology… We're developing relationships with both leading and early stage AI companies and exploring the ways our artists can safely harness responsible and ethical AI artists tools.”
We believe it's perfectly possible to develop and adopt AI technology while also ensuring artists rights are protected
Adam Granite
UMG AI partnerships including Endel, BandLab Technologies and YouTube.
“Universal we're the first company in the creative industries to launch a collaboration with YouTube to develop AI according to a set of principles that gives artists a seat at the table, and will help safeguard their rights as more artist and consumer-facing AI tech comes to market,” concluded Granite.
SUPERFANS AND ROUTES TO MARKET
Representing the British recorded music industry, Vanessa Bosåen, president, Virgin Music Group UK, emphasised the work that the Universal Music company does for artists, including Rema’s global hit Calm Down – the No.2 single in IFPI’s Global Chart for 2023 with 1.89 billion global subscription streams last year.
“It's a little bit frustrating because we get called a distributor – that is the thing that we do and we are very, very good at it,” said Bosåen. “[But] I like to think that really is only one component of what we do.”
Referencing the longevity for Rema’s single since its release over two years ago, she added: “If we were merely a distributor, we would have released that track and that would have been the end of our work. We are still working with Mavin [Records], we're still working with Rema and his team... we are so much more than a distributor.”
We're very much focused on that superfan experience
Vanessa Bosåen
Marie-Anne Robert, MD, Sony Music Entertainment France, suggested that artists are returning to label contracts in order to cut through the noise online.
“Over the past year, we've seen several cases from artists coming to us, asking to switch from distribution to artist contracts because they realise that if they want to be focused on creation, they don't want to be distracted with legal clearance, for instance, or CRM, building your fanbase and so on,” said Robert. “So these artists see our capacity to bring creativity to life through innovation.”
Konrad von Löhneysen, founder and director, Embassy Of Music, said: “[Artists] have access to the platforms, they have their own channels, they can speak to their fans, but they're completely overwhelmed by it. We need to scream to retail and media about how proud we are of the artists, but we also have to manage and help them with their channels, because they're completely overwhelmed.”
Across all labels and companies, there’s a drive for greater engagement with artists’ most loyal supporters.
“One of the areas that we're really focused on is around superfan experiences… for people that want more connection and want more products,” said Bosåen. “I'm not sure we're reaching the full potential of that yet so we're very much focused on that superfan experience.”
THE LATIN MUSIC BOOM
In another year of growth, recorded music revenues in Latin America were up by 19.4%. As well as strong domestic repertoire consumption, it has become a major exporter. Bad Bunny was in the IFPI Top 10 Artist rankings for 2023 and won the organisation’s Global Album Award in 2022.
“Latin America is a cultural powerhouse and it's great to see it finally getting the recognition it deserves,” said Leila Oliveira, president, Warner Music Brazil, who attended the event virtually. “When you look back over the last 20 years, we've come a long way. Back then, our region had very little presence but now if you look at the Top 10 markets by consumption, we have two in the Top 10 with Brazil and Mexico.”
“I think the region's journey is still in its infancy too, it's very exciting for us,” added Oliveira. “As we continue to invest in our artists, we are enabling them to connect with other artists around Warner Music’s global network, helping them to form new trends and helping us to continue the region’s success. That's one of the ways in which Alejandro Duque, our Warner Music Latin America president, has achieved global success with Myke Towers from Puerto Rico and his reggaeton vibes, and Mexico's Yng Lvcas, whose Regional Mexican style is exporting rapidly across the US and LATAM.”
We're seeing artists from different regions merging styles together
Leila Oliveira
Myke towers has collaborated with Warner Music France artist Aya Danioko, as well as Anitta (at the time a Warner act) and Cardi B.
Speaking further about the collaborations and mix of genres, Oliveira added: “We're seeing artists from different regions merging styles together. Similarly, that's what's going to happen also with Regional Mexican music. It will continue to get bigger and bigger, it will be exported across Spanish-speaking markets, and fuse with other regional cultures and genres.”
Kabiru Bello, VP, global A&R, Warner Music Group, also spoke about that process of artist collaboration.
“I see myself as a global bridge for A&Ring artists around the world,” he told the IFPI event audience in London. “My purpose for that is to build a strong A&R network and community. I host regional A&R meetings in the UK and Africa, and with our Asia and Latin team, and we discuss cultural trends, we discuss artists that we can put on each other's radar and how we can really do cross-collaborations together. We speak about ideas for cross-collaboration camps as well. We're having an Afro-European camp coming up in Madrid in April, we have an Afro-Latin camp coming up in June as well. Doing this is based on making sure that we have authentic, organic cross-collaborations.”
THE 'TRANSFORMATIONAL' FUTURE OF MUSIC & TECH
The Orb and David Gilmour may be music veterans, but their AI-based fan reworking project of their ambient album Metallic Spheres In Colour was held up by Sony Music’s Dennis Kooker as an important development in the industry’s tech-focused future.
“I think the reality is, we're in the beginning stages of another transformational event for the music industry,” he explained. “This is something that we're accustomed to in this industry, and we embrace and evolve. But it really has two components. It has a generational component and it has a technological component.”
Kooker pointed to consumption habits that make music discovery more challenging with young fans as the generational issue – although tech can help deliver deeper artist experiences.
“The technological impact is really a combination of the tools that allow fans to participate in an increased way with their favourite artists, new immersive content experiences and the exploding areas around AI,” said Kooker.
“At Sony Music, we really embrace these changes. It's critical that we experiment, that we listen and respond to consumers, while educating our teams and our artists about these shifts. We've listened, we've invested resources including building a dedicated team of experts, for example, to produce artist-led initiatives on new platforms like Fortnite and Roblox.”
Kooker explained how Sony has “leaned in with artists in the generative AI space”.
“Our experiment which is highlighted in the Global Music Report with The Orb and David Gilmour is a great example of that,” he said. “We had an artist that was interested in experimenting but only if it could be done the right way. We listened and helped them build metallicspheres.io, which is still available out there for you to test and experiment with.”
“It's a visual and an audio AI experience where [the AI] training used the artists’ materials and the consumer experience had guardrails to ensure that it stayed focused on the art,” explained Kooker. “It highlighted that artist-led experiences are possible, and that responsible behaviour by cutting-edge tech technology entrepreneurs who want to lean in with us, who respect copyright, is also possible.
“When we think about where the evolution will lead, it is essential that we find new products and new business models around these technologies to ensure the future of human creativity can be invested in, and that creators can be rewarded for the amazing work that they put into the market. We must also fight the position that too many companies want to take to ignore copyright and intellectual property rights and use our content without permission or without proper compensation.”
Despite the strong growth, there has been a round of industry-wide staff cuts, a development that has also impacted DSPs and tech firms.
Speaking about the current changes the industry is confronting with maturing markets and new methods to reach fans, Kooker added: “If we're in a transformational moment, then what we'll learn from the past is we've got to adjust ahead of that. I think our challenge and our role is to anticipate changes in the market, and ultimately to be ahead of those changes and making sure that we're adapting so that we continue to be incredibly relevant and do the most important job that we have, which is to be focused on our artists and deliver our artists the opportunity so that they can build and grow their careers.”
Music Week subscribers can read Sammy Andrews’ latest column on superfans.
FOLLOW 
