A Wave Is Most Powerful Before It Crashes
Where does the music biz sail to next?
To paraphrase an open letter published yesterday in Variety by Hipgnosis head Merck Mercuriadis, the transition of music from “discretionary purchase to utility” has made music as ubiquitous as furniture — in one case, literally (see below).
This week’s news, when looked at collectively, appears to paint a picture of an industry at its corporatized and consolidated high-water mark. And the tsunami of change for the industry — from existential crisis to blockbuster IPOs in less than a decade — has left a lot of winners and losers in its wake.
Since we started The Cadence back in December 2020, we’ve stood by the thesis that “great reset to the music industry caused by COVID will usher in a new era where creativity sits at the head of the table and IP at the center of the conversation.” The work of the next few years will be creating an increasingly equitable and decentralized business where more creative and diverse talents who create that IP get to ride the wave all the way to shore.
Salient statements from this week’s music news.
The markets have given recorded music a big bull hug.
Takeaway: The two companies’ [UMG and WMG] values should be correlated to some extent: They are similarly structured – mainly record labels and music publishers – and affected by the same market forces.
The vague plan thus far is to, “build productive partnerships between the service and music publishers.”
Takeaway: Twitch isn’t paying for additional music licenses as part of the deal, so it’s unclear exactly how much will change as a result of this new partnership.
The head of BMG questions the conventional wisdom of chasing hits over cultivating catalogs.
Takeaway: “When you look at the amount of money that frontline chart hits actually earn versus the costs paying for that part of the business, you can definitely argue it’s a business you don’t want to be in too heavily.”
The question at hand is whether the artist services company could have competed on its own.
Takeaway: That probe could now be taking place alongside a wider investigation into the market power of major labels in the UK
Just so long as they don’t try to assemble it themselves and break up again.
Takeaway: “More and more people are making music at home, and for many music lovers’ home is often the place where they start to explore their creativity.”