Combatting the Emergence of a Two-Tier Music Streaming Market
IMPALA recently asked me to take a look at the economics of the music streaming market, to provide an update on the current state of play, and to suggest a way forward. I called up the lovely Kat for some help, and the resulting report was launched today (alt link hosted on my website).
For some context, we started the project focused on looking at two key areas: 1. the impact of changes forced onto the independent industry, and 2. potential other directions that the industry could take, as detailed in Impala’s 10 points to make the most of streaming. Very quickly, we realised the issues around availability and consistency of data to drive this analysis - the market is complex, vibe-driven, and opaque. And we didn’t want to do another 50-slide deck of back-of-napkin assumptions driving finger-in-the-air headlines, let’s leave that to the MBB / investment banker crew.
So, we used the interviews and feedback data that we’d gained to set off in more of a qualitative direction. We believe that this report, which was released today, reflects the best view of the state of the market from an independent lens available to date.
To assess the situation, we broke the problem down into four parts:
How have we got here, how are the stories that we’ve all seen break in the industry press over the past few years linked, and what themes are emerging
A deep dive into the real impact being felt by stakeholders in the independent music industry, across each of the emerging themes
We set up IMPALA’s “10 points” as KPIs on which we could grade developments in the industry and provide detailed recommendations for improvement
Finally, we look to the future, and provide a view on where the most impactful issues are likely to emerge in the coming 3-5 years
It’s worth reading the report, or at least the executive summary. The key areas for discussion that we put forward are:
De-monetisation thresholds and royalty boosts that are stripping revenue from independent labels and niche genres.
Pay for play-boost tools like Spotify's Discovery Mode, which extract revenue from artists while offering unclear benefits and limited transparency.
Technology-driven pressures, such as the rise of generative AI and streaming fraud, which threaten to devalue human creativity and siphon earnings from legitimate creators.
The mass oversupply of music, driven by low barriers to entry and incentivised volume uploads, which is contributing to dilution in royalty pools and weakening the market visibility and sustainability of legitimate creators.
Subscription prices which continue to lag behind inflation, despite some recent rises
The conclusion that we reach is that there is a significant divide emerging between the largest rightsholders and independent actors, around rates, access, and ability to compete within the streaming market. A “two-tier” industry that is accelerating at the cost of diversity, innovation, and sustainability.
To the point of a lack of data and transparency. From a personal point of view, I was, and remain, genuinely shocked at how little general understanding there is as to the real economic impact on the balance sheets of labels and artists of de-monetisation and pay for play-boosting schemes, especially, but all the themes mentioned. Obviously, there’s a lot of noise, but if stakeholders aren’t given the tools they need to at least get some idea around causality and signal, then it makes it extremely challenging to do any strategic planning - it is a classic case of serious market harm driven by information asymmetry. Despite all the hype around AI and the future of music (…like my last piece), streaming is, and will remain for at least another decade+, the single most important channel to earn money from music, and everyone involved has a duty and responsibility to make it work.
Anyway, that’s all for now. If you read the report, I’d love to hear your thoughts.
I’ll finish up with the quote that I put forward for the press around the report, as I think it captures my feelings on the matter quite well:
“At a time when cultural homogenisation is on the rise, where generative AI is increasingly putting innovative creativity in competition with mass derivation, we risk a future where music diversity is also being actively commercially suppressed.”
super interested in the report but impala music.org seems unreachable for your link or any page. I'm not sure if it is because I am in the US. is there another source to get the pdf from?