Midweek Mix: Music Streams Rising

Plus: How to Train Your A.I., Iger Steps Aside

The U.S. recorded music industry generated $11.1 billion from all sources in 2019, up 13% from the year before, according to data released this week by the Recording Industry Association of America (RIAA).

Streaming paced the field, generating $8.8 billion, up a whopping 20% over 2018, and accounting for nearly 80% of all industry revenue. The rest came from physical media sales (10%), digital downloads (8%) and synch (2%).

Paid subscriptions accounted for 93% of the growth in streaming revenue, with ad-supported tiers delivering the rest.

The U.S. data is in line with 2019 results in other major territories, including the U.K., France and Germany, which also experienced significant, streaming-led growth over the prior year, as well as with the major record labels’ reported fiscal results for the year.

According to an analysis by Music Business Worldwide, in fact, the three major label groups, Universal, Warner Music and Sony collectively generated $22.9 million every 24 hours on average in 2019.

But as noted here a few weeks ago, that rising tide is not necessarily lifting all artists’ boats along with the labels’. Apart from the top acts, streaming has not been overly kind to artists trying to make a living from their recordings, and the natives are starting to get restless.

Even some label execs, like former Universal Germany CEO Tim Renner, have acknowledged the “absurdly low participation” by artists in streaming revenue.

Some argue that music has always been a hits-driven business and that the hit-makers have always done better than the also-rans. Which is true. But in the streaming era, the labels get paid from a shared pool of money based on their overall market share, hits and non-hits included.

That has the effect of diluting the relative value of a hit for the labels vis-a-vis 10 or 15 years ago, and at any rate does not explain why artists’ overall share of the streaming pie isn’t bigger.

In a statement accompanying this week’s data release, RIAA chairman/CEO Mitch Glazer pointed the finger of blame at the streaming services, but you don’t need to listen too closely to hear a hint of defensiveness in Glazer’s comments.

“Today’s report reflects the prospect of a future in which creators have a path forward,” Glazer offered. “But it also reveals how much farther we must go to assure a healthy music community in which all music is valued and creators are fairly compensated. We still have not realized the full value of music on all digital services.”

Who’s this “we” you speak of?

How to Train Your A.I.

The World Intellectual Property Organization (WIPO) last week published the comments it received as part of its public consultation on the impact and implications of artificial intelligence technology on intellectual property policy and practice.

It received over 200 submissions, from individuals, industry groups, companies, legal and technology experts and member states, so it’s a lot to go through. But from an initial sampling of comments from primarily copyright-focused groups it’s pretty clear where the early policy battle lines will be drawn up: Does/should the use of copyrighted works in A.I. training data sets require a license, and do policy makers need to create a legal framework for the use of copyrighted works in training data?

Those are not the only points of dispute. The comments contain many varied and conflicting views on several other issues raised by WIPO in its call for comments, including whether copyright can or should be attributed to works “autonomously generated” by A.I., what type of human involvement would be sufficiently creative to deserve copyright protection, and whether some new, sui generis form of protection is needed to accommodate works generated by A.I. (I recommend Creative Commons’ provocative, iconoclastic take.)

But those questions are in some sense abstract and theoretical, going to the purposes of copyright and the intrinsic value of human creativity. And in any case, they’re addressed to the hypothetical output of A.I. systems.

The issue of using copyrighted works in training data is about inputs. And it’s not at all hypothetical or abstract; it’s happening right now, with existing works. And it obtains irrespective of what happens to the outputs…(read more)

Final Cuts

Mouse clicks

Walt Disney CEO Bob Iger abruptly stepped aside Tuesday and handed the keys to the Magic Kingdom to Bob Chapek, a 27-year veteran of the company. Though sudden, the move is not a total surprise. Iger had announced he would retire at the end of 2021, when his contract expires, and Disney isn’t known for going outside the company for big hires. The one odd wrinkle is Chapek, who has basically been an operations and numbers guy, not a creative or big-picture guy. He ran the home video division back in the 1990s, which was essentially the used-movie business, then moved on to head consumer products, a key segment for Disney but again, basically an ancillary distribution business. Most recently he’s been running theme parks. That may explain why Iger will stay on as executive chairman “direct Disney’s creative endeavors,” according to the company.

Calling the tune

Before its IPO in 2018 (and even somewhat since) many artists and songwriters complained that Spotify was running its business to benefit its founders at the expense of musicians, citing the company’s somewhat dodgy beginnings. Spotify insists it’s trying to build an ecosystem that benefits the entire music industry. But a Rolling Stone analysis of SEC filings shows it’s basically working for a very small number of investors. Co-founders Daniel Ek and Martin Lorentzon own about 31% between them, but over a third of the shares are held by just a handful of investors: Tencent Holdings; Morgan Stanley; T. Rowe Price and Baillie Gifford. All told, 65% of the company is owned by just six entities.

COVID-19 blues

The coronavirus continues to wreak economic havoc around the world, and the media and entertainment industries are not escaping the damage. Shares of Disney, Amazon, ViacomCBS and Apple were all hit hard by this week’s vertiginous stock market plunge (although some M&Es with less exposure to China, like Comcast, AT&T and Discovery fared better). The publishing industry is also scrambling after organizers of the Bologna Children’s Book Fair, a key rights market, moved to postpone the event from the end of March to early May amid an outbreak of the virus in northern Italy. The London Book Fair scheduled for early March is still officially a go, but people are starting to get nervous.