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Note from the Industry

Introduction

Today, on-demand streaming is the most popular way people find and enjoy music from around the world. Streaming services are critical to the success of the music ecosystem – lowering barriers to
entry for artists, democratising access to music for listeners everywhere, and driving a healthier, more diverse music industry than ever before.

Europe provides the leading companies of this sector. The EU is a hotbed of innovation and home to many success stories in digital music. Leading European music streaming platforms, including Deezer, Qobuz, Jamendo, SoundCloud, Spotify, and Soundcharts, have helped transform the music landscape over the last 15 years.

Key driver of the European music sector

Technology has democratised artists’ access to global music markets and helped them gain exposure locally and internationally. Over the last 15 years, music streaming services have enabled more musicians than ever before to cross borders and find new audiences. Streaming is also a significant driver of cultural diversity. European music streaming companies champion European music in all its diversity, and multiple studies show that streaming platforms enable more discovery and diversity of listening than any other medium or historical alternatives, such as radio or physical sales (Datta, Knox, & Bronnenberg, 2018; DiMA, 2023).

Local European repertoire is also thriving on streaming platforms. Studies commissioned in France, Spain, and Poland (Page & Dalla Riva, 2023) demonstrate that local artists and songs are more popular and streamed more than ever before. Local artists are dominating streaming charts across Europe and consistently represent the top streamed artists in their home countries.

A recent study by the Centre National de la Musique (CNM, 2022) in France showed that of the top 4,740 artists streamed on the main services, 43 per cent are French speaking. Among them, 88 per cent are emerging artists. A recent Sony executive also noted that ‘in 2022, we grew from 44% local artists in our Top 200 to 60% – and it’s a trend that is still growing’ (IFPI, 2023). The development and popularity of local repertoire is confirmed by a sharp decrease in the streaming of English-language repertoire in recent years, from 52 per cent to 30 per cent across several European countries (The Economist, 2022).

A recent report from IFPI (2023) showed that subscribers of audio streaming services report the most diverse listening habits of all formats, citing eight genres on average among their favourites (IFPI, 2022). This trend is leading to an increasingly large number of artists composing the top streams and a wider distribution of streaming revenues.

Cultural diversity, freedom of choice, and algorithmic personalisation

The ability to discover new music is one of the main reasons consumers choose to pay for subscriptions over free or illegal alternatives. While the majority of listening on Spotify is user-driven, playlists and algorithmic recommendations play a useful role in facilitating the discovery of new artists, genres, and songs that are relevant for listeners. A recent survey of music listeners found that 86 per cent of streaming users find streaming recommendations relevant and useful (DiMA, 2023). Without them, users would be faced with a static library and would be far more likely to play a more limited number of artists and songs.

However, the influence of algorithms and playlists should not be overstated. Streaming is, by its very nature, on-demand, and European users always want to keep their freedom of choice. In this respect, several studies and data show that a majority of streams are still user-led, for example through user searches and the creation of their own playlists (CMA, 2022: 62, Table 2.14; CNM, 2022: 21).

New technologies – new dilemmas

The emergence of new technologies and business models has provoked questions in Europe about how to ensure a sustainable environment for artists, authors, and businesses across the music value chain.

Streaming offers many unique opportunities to creators that simply did not exist in the physical era. In addition to greater exposure to local and international audiences, the data and tools provided by streaming services to creators and their teams are helping them to succeed in new ways. For instance, sophisticated data analytics about their fans, their stream counts, the popularity of their tracks in different countries, and other resources help artists and authors to understand their audience and manage their online presence. This data is also being leveraged by creators and managers to develop other revenue streams, for instance helping them to plan tours where artists are popular or sell merchandise to their most engaged fans.

At the same time, technological advancement also raises new debates over such things as the remuneration of creators. European music streaming services pay close to 70 per cent of their gross music revenues to rights-holders, including record companies, publishers, and authors’ collective management organisations (CMOs). These payments have led to a resurgence in the wider music industry’s growth, after many years of decline.

As a result, the sector is thriving economically, and the pie is growing for everyone involved. The revenues of the recorded music industry have been growing consistently since the emergence of streaming and grew again by 7.5 per cent in Europe in 2022 (IFPI, 2023). Authors’ CMOs have also recorded strong revenue growth in recent years, reporting a 26.7 per cent increase in global collections to €12.07bn in 2022, driven by digital collections (+33.5 per cent) (CISAC, 2023). This growth trend is replicated across Europe, with authors’ CMOs in countries such as Germany, France, Greece, Spain, Sweden, Italy, the Netherlands, Bulgaria, and Belgium all recording strong revenue growth in recent years (CISAC, 2023),114 in particular from online collections, including in the years prior to the COVID-19 pandemic.

At the same time, it is important to note that streaming services do not pay artists and authors directly – rather, we contract with licensing partners such as labels, CMOs, or distributors, who then distribute revenues based on contractual terms. Streaming services do not determine how much the artists ultimately receive from these licensing partners. Music streaming services are also not yet profitable or operate on razor-thin margins.

Policy challenges: a need for a balanced and comprehensive approach

The debate about artists’ remuneration as well as other complex issues needs to be carefully examined. Any policies must be balanced for everyone involved. For policy-makers to do so, it is essential to gather a complete picture of the European music streaming market, including all its players, and evidence on its functioning and economics, in order to identify problems and possible solutions.

A constructive dialogue between industry representatives and policymakers on national and European levels is vital. Even more important is that these policy discussions are fact-based and look at the entire music value chain. They should take into account the consumer, legal, and economic realities in which streaming services operate, and they should ensure that European music streaming companies can continue to grow, for the benefit of consumers, creators, and the music sector as a whole.

Digital Music Europe represents leading European music streaming platforms, including Deezer, Qobuz, Jamendo, SoundCloud, Spotify and Soundcharts. They have revolutionised the way music is accessed, discovered, and enjoyed throughout Europe and the world, to the benefit of millions of consumers and creators.


References

  • CISAC. (2023). ‘Global Collections Report 2023’, https:// gcr2023.cisac.org/EN/.
  • CMA (Competitions and Markets Authority). (2022). Music and Streaming: Final Report, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1120610/Music_and_streaming_final_report.pdf.
  • CNM (Centre National de la Musique). (2022). ‘Indicators of Music Diversity on Streaming Platforms’, https://cnm.fr/wp-content/uploads/2023/09/Diversite-musicale-2022-Streaming-audio-ENG.pdf.
  • Datta, H., Knox, G., & Bronnenberg, B.J. (2018). ‘Changing Their Tune: How Consumers’ Adoption Of Online Streaming Affects Music Consumption and Discovery’. Marketing Science, 37(1), 5–21, https://doi.org/10.1287/mksc.2017.105.DiMA (Digital Media Association). (2023). ‘Fan Engagement
  • Report 2023’, https://dima.org/streaming-forward-2023-fan-engagement-report/.
  • The Economist. (2022). ‘What Spotify Data Shows about the Decline of English’. 29 January, https://www.economist. com/interactive/graphic-detail/2022/01/29/what-spotifydata-show-about-the-decline-of-english.
  • IFPI. (2022). ‘Engaging with Music’, https://www.ifpi.org/wp-content/uploads/2022/11/Engaging-with-Music-2022_full-report-1.pdf.
  • IFPI. (2023). ‘Global Music Report’, https://www.ifpi.org/wp-content/uploads/2020/03/Global_Music_Report_2023_State_of_the_Industry.pdf.
  • Page, W., & Dalla Riva, C. (2023). ‘“Glocalisation” of Music Streaming within and across Europe’. London School of Economics, https://www.lse.ac.uk/european-institute/Assets/Documents/LEQS-Discussion-Papers/EIQPaper182.pdf.
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