Spotify broke the $9.99 value barrier this week, paving the best way for greater music streaming costs. UMG Chairman Lucian Grainge praised the transfer amongst DSPs, however says it doesn’t go far sufficient.
Grainge spoke to Wall Avenue analysts about UMG’s earnings report, addressing the latest spate in DSP value hikes. YouTube Music has raised its value, with Apple Music, Amazon Music, Deezer, Tidal, and at last Spotify following alongside behind. “We clearly welcome Spotify’s announcement, in addition to YouTube’s announcement,” Grainge mentioned of the value hikes.
“Addressing common income per consumer is just one element. First we should be certain that actual artists with actual fan bases are pretty compensated,” he continued, echoing comparable complaints earlier than. Grainge has talked about up to now that he doesn’t imagine nature sounds and different cozy streaming content material ought to generate the identical income potential as musical artists.
“I wish to stress our purpose is straightforward, to advertise an surroundings the place actual music isn’t drowned out in a sea of noise,” Grainge advised buyers. Warner Music CEO Robert Kyncl has said one thing comparable in talking about how labels distribute their revenues. “It could’t be that [an] Ed Sheeran stream is price precisely the identical factor than a stream of rain falling on the roof,” Kyncl mentioned throughout the Q2 2023 earnings name.
Kyncl additionally expressed that he believes the present streaming mannequin undervalues music. One instance he showcased is how YouTube TV’s subscription value has elevated by 100% over 5 years—whereas YouTube Music has not proven the identical development.
“Each companies grew very efficiently and the reason for that’s the construction of the agreements with [DSPs]. That construction was actually good for the music business. It has taken it from a low level to an unbelievable recurring income stream all around the globe with huge quantities of individuals and fee devices on file, premium expertise, personalization, all of that.” However Kyncl reiterates simply because the mannequin saved the enterprise, doesn’t imply it should proceed to be the eminent mannequin shifting ahead.
“That doesn’t imply that it’s the proper factor for the following ten or 20 years. It has to alter and it’ll change. One of many causes for that’s that there’s not an actual incentive for value will increase that you simply see in each different business, however the different is that each stream is valued precisely the identical manner. And that doesn’t look like one thing that’s aligned with the best way the world works.”
“Music can’t be the one business that doesn’t assign worth to high-value artists and songwriters and that it doesn’t drive ARPU development the best way each different business does,” Kyncl concludes.