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What is Happening to Streaming’s Superstars?

New analyses reveal a surprising truth: Over the past three years, the world’s biggest artists have seen their market share of total streams — and therefore total money distributed by the likes of Spotify — decline significantly. Why?

ATLANTA, GA - NOVEMBER 18: Drake performs onstage during the Final Stop of 'Aubrey & The three Amigos Tour' at State Farm Arena on November 18, 2018 in Atlanta, Georgia.(Photo by Prince Williams/Wireimage)

Drake performs onstage during the Final Stop of 'Aubrey & The Three Amigos Tour' at State Farm Arena on November 18, 2018 in Atlanta, Georgia.

Prince Williams/Wireimage

Think of the biggest-earning artists on music streaming services like Spotify and Apple Music, and the usual megastars might come to mind. Drake, Ariana Grande, Ed Sheeran and Billie Eilish and Khalid, for example, have all featured at the top of the biggest global charts on the biggest global services in recent times.

As previously explored on Rolling Stone, the way these platforms pay out is even specifically designed to reward such blockbuster artists: Spotify’s “service-centric” royalty model sees an artist earn (often via a record label) a certain proportion of the platform’s entire global royalty pot — with their individual share equivalent to whatever percentage of service-wide plays they achieve in a given month. (To put it another way, if you pay $9.99 a month for Spotify and then only play a struggling indie artist, that act won’t get your $9.99 — it will be put in a central royalty pool, which is then divvied up between all artists worldwide, meaning Drake, Ariana Grande, Ed Sheeran, et. al, get a slice of your dollars.)

On the surface of things, then, superstar artists are increasing their dominance of global streaming platforms, and of the money these services pay out, right? Wrong.

According to some revelatory analysis of annual U.S. audio streaming platforms, presented below, we can see that, in fact, the opposite is true: Over the past three years, the world’s biggest artists have seen their market share of total streams — and therefore total money distributed by the likes of Spotify — decline significantly.

The first alarm bell came from an MBW report back in January. It showed that, according to yearly BuzzAngle/Alpha data, the top 50 streaming tracks in the United States last year racked up 3.7 billion plays between them. This was significantly down on the volume of U.S. streams accumulated by the top 50 tracks in 2017, which cumulatively came to 14.7 billion — almost four times the size of 2018’s equivalent numbers.

This decline, frankly, wasn’t supposed to happen. Overall on-demand audio streams in the United States in 2018 grew by a very healthy 42 percent year-on-year, to 534.6 billion. Yet in the same year, the top 50 streaming tracks claimed just 0.7 percent of these plays, down from 3.9 percent in 2017.

This trend affected the top 500 most-streamed songs in the States, too. In 2018, according to BuzzAngle/Alpha data, the top 500 tracks on services like Spotify racked up a total of 55.03 billion U.S. streams. This was up by 2.17 billion on the previous 12 months, which sounds impressive . . . until you consider that overall on-demand audio streams in the U.S. grew by a massive 157.7 billion streams in the same year.

What that means: More than 98 percent of the growth in audio streaming seen in the United States last year came outside the format’s top 500 tracks.

The big question, then: What kind of artists were being played outside these top 500 tracks, and how is that affecting the dominance of streaming’s global megastars?

To answer that query, again using BuzzAngle/Alpha data, I have calculated the total annual streams of the top five, top 10 and top 25 most played artists across audio (i.e., not including video) on-demand streaming platforms in the United States over the past three years. (For those wondering: In 2016, the USA’s number-one streaming artist was Drake; in 2017, it was Drake; in 2018, well, blow me down, it was Drake.)

This consequently allows us to reveal the annual market share of total streams these blockbuster acts attracted on Spotify, Apple Music, etc. — and to discover whether this figure correlates with the sharp decline in market share claimed by each year’s top 500 tracks.

To start, here’s how the stats stack up in terms of overall volume of annual U.S. streams within these subsets (top five artists, top 10 artists, top 25 artists).

As you can see, there is what appears to be healthy growth among blockbuster acts, volume-wise, in all three categories. For example, the amount of on-demand streams accumulated by the top five artists in 2018 (22.3 billion) was almost double that of the equivalent number from 2016 (12.9 billion).

However, when we look at these stats a different way — as a percentage of the overall plays registered on U.S. audio streaming platforms in each year — the numbers start to move in the opposite direction.

Let’s focus on the top-25-artists figure to get a useful snapshot of what’s going on here. In 2016, the top 25 acts on audio on-demand streaming services claimed 12.8 percent of all U.S. streams; by 2018, this figure had dropped to 11 percent.

A 1.8 percent market-share loss across two years hardly seems terminal, but consider this: A 1.8 percent share of 2018’s on-demand streaming volume in the U.S. (534.6 billion) equated to 9.6 billion streams. That’s a massive play count that pop’s 25 biggest artists have effectively lost to all of the artists outside their ranks.

As a very approximate calculation, those 9.6 billion streams would have been worth around $38 million in artist/label royalties.

The trends demonstrated here — combined with the fact that new artists, rather than older recordings, are gaining market share on audio streaming services — suggests something very important is going on in the global music business: A “middle tier” of new artists, operating away from the million-dollar advances of streaming’s biggest acts, are increasing their share of the format’s economics. Or, to phrase it another way, streaming, slowly but surely, is creating a commercial ecosystem in which more artists are able to make a living — and forcing the biggest-earning megastars on the planet to share a chunk of their annual wealth.

One company fixated on this “middle tier” trend is Kobalt, whose recorded-music company, AWAL, offers artists label-like deals (with advances, marketing dollars, etc.) while allowing them to keep hold of their copyrights. Kobalt’s New York-based CEO, Willard Ahdritz, recently told me that his firm estimates there were 20,000 Anglo-American artists worldwide in 2018 who generated tens to hundreds of thousands of dollars — as opposed to millions — in annual revenues from their recorded-music catalogs. Thanks to the trends outlined above, Kobalt projects this number will more than treble (above 60,000) in the next five to 10 years.

Driven by streaming, the company forecasts that cumulative money earned by this “middle tier” of artists will grow significantly faster than money generated by either superstar artists or lower-tier acts in future. “We’re going to create a situation where 100,000 artists exist and earn significant money from their recorded music each year,” said Ahdritz confidently.

Interestingly, AWAL is not alone in this philosophy. Los Angeles-based distribution and services company Stem, which has raised more than $12 million in funding to date, has upset many amateur artists this month by shutting down its DIY distribution tier, a tool that previously allowed any Stem act to upload their music to Spotify, Apple Music, Pandora, etc.

Instead, Stem has launched “Stem Direct,” which has many similarities to AWAL’s model — particularly its tighter focus on a curated roster of VIP acts, who show higher earning potential than the tens of thousands of DIY artists now being kicked off the company’s system. All of this suggests that, in market-volume terms, streaming’s economics are about to fatten up the wallets of the “middle class” of artists — making them significantly richer as a community, likely at the expense of the biggest superstars on the planet.

Tim Ingham is the founder and publisher of Music Business Worldwide, which has serviced the global industry with news, analysis and jobs since 2015. He writes a weekly column for “Rolling Stone.”

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