Pre-Grammy Primer
Our guide to being the smartest person at any industry soirée.
Grammy week is upon us, which has meant non-stop meet-ups and get-downs around Los Angeles. The big event isn’t until Sunday, but we warmed up with the Clio Music Awards on Wednesday which saw Doja Cat’s partnership with Taco Bell and Harry Style’s integrated campaign for Harry’s House each earn Grand awards while Google’s Gorillaz Presents activation got a Gold and Spotify nabbed three Silver awards for its Wrapped campaign, plus one for its Spotify Island experience in Roblox and one for FC Barcelona x MOTOMAMI collaboration that paired sing Roslía with its controversial fútbol partnership.
But industry awards aren’t enough to insulate the world’s biggest music streamer from a torrent of disgust over the company’s decision to give Joe Rogan a new contract worth $250 million. Some of the ire is based on a dislike of Rogan’s particular brand of contrarian libertarianism, but many also conflated Rogan’s sky-high payday with the layoffs that plagued Spotify throughout last year and the controversial decision to demonetize songs under 1,000 monthly streams (in other words, more than half the songs on the platform) in an effort to reduce loss to noise.
As is always the case with these things, the numbers can prove whatever narrative a partisan chooses to champion, and the devil is in the unknown details. Is paying $250M for Rogan a fool-hearty outlay at the expense of musician’s money? Not directly, at least. Could Rogan be bringing in and retaining enough subscribers each month that he’s actually propping up a portion of the royalty pool? Maaaaaybe?
This week, you YouTube’s Premium and Music package hit 100 million subscribers, while Apple announced that it set ‘all-time revenue record’ for its services in Q4 2023. Because both of these numbers blend music streaming with other subscription services, it’s impossible to parse what percentage of revenue will end up in the hands of musicians. But the same way Starbucks used to buoy CD sales while selling coffee, these sorts of bundles will continue to feed music revenue that aren’t as obvious. With that in mind, calling for the failure of Spotify’s podcast play could be shortsighted.
The Rogan news hit on Friday, so we’ll have to see if it’s forgotten by the start of business next week. But one story that will undoubtedly be discussed in the coming days/weeks is the contract conflict between Universal Music Group and TikTok. The pissing match over licensing fees between the world’s biggest record label and the preeminent hit-making platform became the biggest pre-Grammy news when UMG exercised the nuclear option of removing all of its IP — little acts like Taylor Swift, The Weeknd and Drake — from TikTok on Thursday.
Both sides have fired off inflammatory statements, each accusing the other of — surprise — placing corporate greed over musician’s well-being. Our hot takes include a) UMG is attempting to use the inertia it gathered while forcing Spotify to revise royalties last year to further mold the industry in its favor, but b) the publicly traded company will have a much harder time getting the private and faceless Chinese company Bytedance to roll over, and c) either side advocating for musicians is really just using them as a PR pawn since the system of global capitalism doesn’t incentivize any major corporation — not UMG, not Bytedance, not Spotify — to prioritize artists interests over their own bottom line.
Give us your own hot takes by replying to this newsletter.
TAKEAWAYS
Salient statements from this week’s music news.
1. Layoffs, Licensing and More
Many of music’s biggest companies will be dropping their Q4 2023 earning reports in the coming weeks.
Takeaway: How music companies organize themselves is changing. How royalties are calculated and paid is changing. How companies engage with fans is changing. And investors have different expectations of public companies — more focus on margins, less obsession with growth.
2a. YouTube Music and Premium Hits 100 Million Subscribers — Despite a Recent $2 Price Increase
2b. Apple Set ‘All-Time Revenue Record’ for Its Services in Q4 2023
The same way Starbucks used to buoy CD sales while selling coffee, these sorts of bundles will continue to feed music revenue that aren’t so obvious.
Takeaway: “We achieved all-time revenue records across advertising, cloud services, payment services and video, as well as December quarter records in App Store and AppleCare,” CEO Tim Cook told analysts. No mention of Apple Music, which suggests that the final quarter of 2023 was neither an all-time record nor a December-quarter record for the service.
3. Indie Labels Cry Foul Over Apple Music’s Enhanced Spatial Audio Royalties
Concerns our guest voiced last summer over spatial audio costs are becoming more apparent.
Takeaway: Unnamed music executives told the Financial Times that producing songs in spatial audio adds $1,000 per song to the production, or about $10,000 for an entire album, and updating older music could be even more expensive.
