5 Takeaways From Chartmetric’s 6MO Report
What data is telling us about the future of the music industry
Welcome to Issue #7 of Appetite for Distraction, a newsletter exploring how technology is bridging the gap between art and commerce. My goal is to make this a resource that cuts through the noise; helping creators and creative industry professionals make informed decisions.
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Quick update: Instead of sending out an issue every Monday, I’m changing my publishing schedule to Friday so I can align my weekends with societal weekends!
5 Takeaways from Chartmetric’s 6MO (Jul-Dec 2020)
Chartmetric recently published their semi-annual 6MO: Music Industry Trends From H2 2020. An interesting peek into emerging trends in the industry, and a chance for me to crash-test my hypotheses against pure data. In this essay I distill some key takeaways:
Accumulated Social Capital Is a Prerequisite For Record Deals
If you’re planning to become a major label signed artist, building a social media presence comes first, and musical talent second. Social capital cannot be an afterthought. I’ve previously covered the impact of TikTok on modern A&R.
Lele Pons is Exhibit A. Starting off on Vine, she was the first creator to reach 1 billion loops on the platform. Lele transitioned to other social platforms when Vine shut down, racking up a huge following and resulting internet celebrity. She tried her hand at music in 2018 and has been releasing a steady stream of music since then. Lele’s monthly listeners as of December were at 11.5m, up by ~650% from 1.6m monthly listeners in July.
TikTok is a Strong Top-of-Funnel. But a Leaky One.
TikTok is a formidable marketing force and has propelled various tracks to the top of DSPs. What remains to be seen though, is how artists convert this exposure into loyal fans. Even though TikTok may lead to track-level virality, it does not lead to a more intimate, artist-level fandom. A small percentage of artists behind TikTok’s viral sounds have a strong fan following to back them up. A miniscule fraction have people show up at gigs. Artists need to optimise this funnel.
Broad Music Consumption is Better for Paid Subscription Models
The report defined deep music consumption and broad music consumption. Deeper music consumption entails higher total number of views/streams. While broad consumption means that the views/streams are spread out across multiple artists.
The report looks at the top 20 cities based on music consumption on YouTube. 18 Indian cities make the cut, with a very deep consumption trend — a higher amount of views for a very specific, non-diverse set of artists. Mostly domestic superstars like Alka Yagnik.
Whereas, the developed world actually has broader music consumption patterns. Even though the total consumption is lower than Asian and Latin American cities, listeners in NY and other global music hubs listened to a more diverse set of artists.
Listeners in the developed world have a more diverse taste. They prefer paying for an all-you-can-eat buffet at a fixed price.
Listeners in the developing world listen to a specific set of artists, and don’t want to explore. They don’t find paid subscriptions appealing.
Unsurprisingly, 59% of Spotify MAUs are from North America and Europe.
The main challenge in emerging markets has been clear for a while — how does one monetize the high music consumption given most of it is free i.e. advertisement-based?
Chartmetric’s report might hint at what not to do. Some of the cities with the highest music consumption have extremely local tastes, with a power law highly skewed towards top domestic stars. DSPs need to adapt their value propositions accordingly. Bicep-flexing over catalog size and recommendation algorithms doesn’t work when all consumers want to do is ‘binge-listen’ to a specific set of artists.
If you're Pop, Go Deep. If you’re Indie, Go Broad. (But of course there are exceptions!)
If you’re a mainstream pop artist, you would rather aim for cities that have a deeper i.e. higher overall music consumption. Superstar effects are higher in emerging markets. (especially India)
If you’re an indie, niche artist, you might want to target the developed world: cities with broader, more eclectic tastes like New York, Los Angeles, or London. Mexico City, São Paulo, and Santiago are fascinating exceptions. (prospective deep dive on why in a future essay!)
Convergence of Entertainment in The Attention Economy = Dilution of ‘Pure Music Consumption’
Asia and South America have significantly higher populations, lower incomes, cheaper internet services, and high smartphone penetration. This makes them gravitate towards video based entertainment formats. (primarily YouTube)
But once consumers get sucked into the YouTube wormhole, the chances of them having a more diversified interest in video entertainment (apart from purely music) is inevitable. The complexity of human psychology and our insatiable appetite for distraction needs to be acknowledged, and studied further.
Cheaper CPC Does Not Lead to Organic Fandom
The report states that it's cheaper to advertise in emerging markets due to a lower CPC. Again — great top-of-funnel. But essentially the question comes down to — what are listeners (and potential fans) in the developing world worth? We need to take into account macroeconomic factors such as a country’s disposable income.
A casual fan in Berlin will be willing to pay significantly more (for merch, concerts, etc.) than a superfan in Bangkok. Calculate your campaign ROI accordingly.
The Trigger Cities concept is a great decision making framework. Ultimately, each artist needs to invest their time and money depending on their goals. Are you aiming for exposure/virality? Are you aiming to monetize your 1000 true fans? Needless to say — targeting trigger cities is effective only if there is a powerful exposure —> monetization funnel.
Apple Plans Podcasting Subscription Service in Threat to Spotify | The Information
Snapchat Wants You to Post. It’s Willing to Pay Millions. | New York Times
What I’m Reading
Humboldt's Gift | Saul Bellow, Penguin Classics
The philosophical undertones throughout this book punch and coax simultaneously.
“The earth is literally a mirror of thoughts. Objects themselves are embodied thoughts. Death is the dark backing that a mirror needs if we are to see anything.”
“And I said to myself that unless you conceive Death to be a violent guerrilla and kidnaper who snatches those you love, and if you are not cowardly and cannot submit to such terrorism as civilised people now do in every department of life, you must pursue and inquire and explore every possibility and seek everywhere and try everything.”
What I’m Listening To
Jeremy Messersmith’s time-tested classic. (Which is ~2 years in today’s music biz)
Kevin from The Office made $1 million on Cameo (Yeah, I know!). Planet Upload is essential listening if you’re fascinated by the creator economy.
I'd love to get some feedback on your experience reading the newsletter. It'll really help me focus on what you'd like to see more of, and what would be best left out.
If You’ve Made It This Far..
You can make it all the way.
What I’m Brewing — Os Lacerdas from William & Sons Coffee Co., Porto Alegre
I genuinely believed I was having true Minas Gerais before I tried this coffee. (¡Gracias Nina!)
Until next week,