10 years ago, Warner Music’s top 5 superstars generated 15% of its revenue. Today this number has come down to just 5%.

MBW’s State of the Week is a series in which we highlight a single data point that deserves the attention of the global music industry. Endorsed by State of the Week five music groupsA technology-driven record label, distribution and rights management company.

One of the most dramatic effects of streaming on the record industry has been the democratization of listening.

The logic goes like this: In the pre-Spotify past, consumers would have to make a committed decision about the next record they wanted to buy. That transactional buying decision was narrow, and largely guided by media and broadcast channels – the supposed ‘gatekeepers’ – who were limited in the number of artists they could recommend to the Great Unseen.

These days, no transactional buying decision is required. No consumer needs to ‘gamble’ their money on a brand new record – they just need to load it onto Spotify/YouTube Music/Apple Music etc, click play and see if they’re interested Huh.

If they like it, they can keep listening. If they don’t, they might as well just skate on to some other auditory pleasure.

Year after year, this phenomenon is dramatically reducing the concentration of total music listening claimed by some of the world’s biggest megastars.

As a result, in any given year, a greater proportion of total streams is moving away from the top 10 greatest hits, and towards a much wider array of ‘middle class’ artists, but not necessarily chart-busters, fanbase.

MBW’s seen this statistic a few times this year, but it’s worth repeating: The top 10 audio streaming tracks in the US, according to our calculations of Luminate statistics H1 2022 played cumulatively 1 billion times less than they were in H1 2019 (2.74bn vs 3.81bn).

Impact of Streaming on Live Business

This phenomenon is not exclusive to the record industry.

in an upcoming interview in worldwide music business 2022/2023 YearbookJay Marciano, CEO and president of AEG Presents, noted that the democratization of listening on streaming services has had a significant impact on his company’s “bar and theater” business—that is, venues that typically have hundreds rather than thousands of ticket-holders. .

“A club that used to do 100 shows a year in 2012 is now doing 180 shows a year,” says Marciano. “It’s a direct result of having more talent [with a viable fanbase] Available. This is a huge byproduct of the benefits of streaming.

“A club which used to do 100 shows a year in 2012 is now doing 180 shows a year.”

Jay Marciano, AEG Presents

He adds: “What’s new is the frequency that fans are going [these] Shows: The quoted stat, years ago, was that the average concert-goer went to 1-point-a few shows a year.

“In our experience, at the club and theater level [today]Where the audience is primarily 22- to 32-year-olds, it’s more like eight times a year.

warner music group

Warner’s ‘portfolio’ strategy

In turn, all of this has had an impact on the A&R strategy of major music companies.

You’ll recall that in September, Steve Cooper, the outgoing CEO of Warner Music Group, said that — thanks to streaming — his company had moved toward a “portfolio” A&R strategy.

“What we’ve done over the years is reducing our [financial] Reliance on Superstars Reducing that reliance has allowed us to continue to strengthen our approach to A&R, which is long-term artist development.

Steve Cooper, speaking in September

This strategy, Cooper explained, meant that WMG was now spreading its A&R budget among a wider range of artists, thus reducing the company’s financial “reliance on superstars”.

Or to put it another way: Warner is investing a small portion of its ever-increasing A&R budget each year into a select handful of global stars, and spreading a large portion of this budget over artists who have just made a name for themselves. Haven’t bothered making the top 5 yet. Billboard Hot 100.

A major new data point to play with

Speaking on Warner Music Group’s calendar Q3 earnings call on Tuesday (Nov. 22), Cooper provided us with a milestone that reflects the business reality of the above trends.

Cooper revealed: “A decade ago, our top 5 artists generated over 15% of our recorded music physical and digital revenue. In 2022, they generated just over 5%.

To walk you through this again: The top 5 best-selling artists at one major record company, as a subset, accounted for two-thirds of the cumulative share of revenue generated at that major record company over the past 10 years. Is.

Where did those two-thirds go? We’ll come back to that – because it’s a bit more subtle ’cause they’ve all disappeared into the “middle class” of artists that MBW keeps raving about.

“A decade ago, our top five artists generated more than 15% of our recorded music physical and digital revenue. In 2022, they generated just over 5%.

Steve Cooper, speaking this week

For now, let’s gaze at the prize, sift through some SEC filings, and do the numbers.

by Warner Music Group annual fiscal reportThe amount of WMG’s recorded music physical and digital revenue (that’s CD, vinyl, download and streaming royalties combined) $3.868 billion in FY2022 (12 months till the end of September this year).

A decade ago, in FY2012 (12 months before the end of September 2012), the equivalent figure in WMG was $1.830 billion,

(Take a brief moment, please, to marvel at the fact that, under Steve Cooper’s leadership, that figure is higher than doubled In 10 years at WMG … and come back to the math.)

Below, you can see how Steve Cooper determined this week’s projected percentages – RE: Warner’s Top 5 Annual Performers in FY2022 and FY2020 – (i) in real monetary terms, and (ii) pie chart form. I see [Click on the chart to view numbers.]

Main takeaway?

Here are the top 5 recorded music artists most likely to cumulatively generate from Warner Music Group in fiscal year 2012, according to MBW’s Steve Cooper’s count of the numbers. big amount of annual digital and physical royalties ,≈$274.5m) compared to the equivalent top 5 artists in WMG generated in FY2022 (≈$193.4m,

it’s not just the fall share of revenue; there is a decline Real generate revenue.

This, remember, represents a ten-year period when WMG’s overall recorded music royalties more than doubled ($1.83bn In FY2012 Vs. $3.87bn in FY2022).

Warner’s ‘broad and deep’ artist roster

Steve Cooper took the time Tuesday to explain some of the reasons behind the decline in revenue share of Warner’s Top 5 artists over the past decade.

He noted that, in addition to losing share to ‘middle class’ artists – as described above – a group of today’s biggest superstars are also fighting for a share of listening. (I) Artists from more countries than ever before, and (Second) Artists from many different eras.

point (Second) was expressed this year by Warner Music-Distributed running up That Hill by Kate Bush, who was officially the world’s most popular hits on Spotify this summer after its appearance on Netflix Stranger Things.

point (I) summed up when you look at the range of major-league stars from different parts of the world who have signed to the Warner label over the years – including Anita (Brazil), who has just been nominated for a Best New Artist Grammy in 2023, as well as burna boy (Nigeria), twice (South Korea), and Paul London (Argentina).

“Ten years ago, we were an Anglocentric company. Today, we are a truly global music entertainment company.

Steve Cooper, WMG

Indeed, this week, Warner announced a global deal with Dalia Mubarak, described by WMG as ‘one of the most influential female superstars in the Middle East’.

Steve Cooper said on Tuesday’s earnings call: “As we broadened and deepened our artist roster, and prioritized a global approach to home music, our revenue structure has evolved … we’ve proven once again that Given that music can come from anywhere and resonate everywhere.We not only develop Anglo blockbusters, but also create superstars in their home territories.

Added Cooper: “Ten years ago, we were an Anglocentric company. Today, we are a truly global music entertainment company, operating in over 70 countries.

Cinq Music Group’s repertoire has garnered Grammy Awards, dozens of Gold and Platinum RIAA certifications, and multiple No. 1 chart positions on a variety of Billboard charts. Its repertoire includes such legends as Bad Bunny, Janet Jackson, Daddy Yankee, T.I., Sean Kingston, Anuel and hundreds of others.worldwide music business

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