LABELS PIGGING OUT AT THE STREAMING TROUGH: Last week I posted an article about the Copyright Royalty Board’s decision to raise publisher (songwriter/composer) royalties on interactive streamed music by 44% over the next four years. In fairness to the publishers, even with this increase their royalties as a percentage of what the streamers pay for content is still a fraction of what the performers and artists receive. For an idea of what one of the major label’s rev picture looks like check out Warner Music Group’s Q1 earnings results in the attached Billboard link. WMG is thriving again thanks to streaming, with revenue up 14% YoY. While most people would agree that a healthy industry is great for everyone who loves music, it still feels like there’s an imbalance here. Labels and their artists are making money again, the publishers are set to cash in, but the streamers are still in the red. I wonder what WMG’s balance sheet would look like if Pandora, Spotify, etc. ever went out of business. Hopefully we’ll never have to find out.
FEWER ADS IN OUR FUTURE: Here’s a thought provoking idea. In five years marketers’ ability to reach consumers through advertising will decrease by 20-30%. That’s the doomsday prediction from (ironically) Publicis’s Chief Growth Officer Rishad Tobaccowala, according to the attached Media Post link. There are two factors driving this forecast. First, consumers will continue gravitating towards ad free subscriptions for media content (aka Netlfix), as a way to avoid commercials. And second, marketers will shift from traditional advertising to direct outreach by using purchase-based and behavioral retargeting. Envision P&G knowing individual customers so well that they could ping parents through a connected device when they’re ready to buy more Pampers. One could argue that the latter use case it still marketing, but the direct path is very different from today’s ad model of embedding commercials in content. Not the rosiest prediction for industry, but worth considering.
Have a great Tuesday guys!
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