WINTEL 1 THE GLOBAL ECONOMIC & CULTURAL CONTRIBUTION OF THE INDEPENDENT RECORD INDUSTRY

WINTEL WORLDWIDE INDEPENDENT MARKET REPORT 2018 2 WINTEL 3 4

THE CURRENT WIN TRADE ASSOCIATION MEMBERS ARE:

A2IM US ADISQ CANADA ABOUT WIN ABMI BRAZIL AIM UK AIR AUSTRALIA AMAEI PORTUGAL ASIAR ARGENTINA AUDIOCOOP ITALY HENRIETTE HEIMDAL PROJECT MANAGER, WIN BIMA BELGIUM The Worldwide Independent CIMA CANADA Network (WIN) is the coordinating body for national independent DUP DENMARK trade associations representing the recorded music industry around IMCJ JAPAN the planet. Launched in 2006 in FONO NORWAY response to global business, creative, and market access issues faced IMI CHILE CHILE by the independent sector, WIN collectively advocates, instigates, IMPALA EUROPE and facilitates for its membership. IMNZ NEW ZEALAND INDIECO FINLAND INDIESUISSE SWITZERLAND LIAK SOUTH KOREA PIL ISRAEL PLATFORMA CZECH REPUBLIC IN ADDITION TO THE NETWORK OF PMI ITALY ASSOCIATIONS, WIN HAS A NETWORK OF LOCAL REPRESENTATIVES FROM RUNDA BALKANS TERRITORIES WHERE THERE IS CURRENTLY SOM SWEDEN NO TRADE ASSOCIATION, INCLUDING:

STOMP NETHERLANDS CARIBBEAN NIGERIA UFI SPAIN CHINA POLAND UPFI FRANCE INDIA ROMANIA VTMOE AUSTRIA IRELAND SOUTH AFRICA VUT GERMANY MALAYSIA VIETNAM WINTEL 5

FOR MORE INFORMATION PLEASE VISIT: WIN GRATEFULLY ACKNOWLEDGES MIDIARESEARCH.COM MUSICALLY.COM THE ASSISTANCE PROVIDED BY WINFORMUSIC.ORG EVERYONE WHO HAS CONTRIBUTED TO WINTEL 2018

DESIGN BY OSTREET.CO.UK MIDIA RESEARCH MUSIC ALLY

MIDiA Research is a boutique media Music Ally is a knowledge company. and technology analysis company. We have more than 15 years worth of information, experience and data Mark Mulligan is the Managing on the global music business. Director of MIDiA Research and a long term media and technology analyst Our daily news and weekly insight and a leading thinker on the music briefings cover markets, technologies, industry’s digital transition. Mark has trends and viewpoints that are 15 years of media business analysis shaping the modern industry. We are and consulting experience, working also the leading training provider with leading global media, technology on digital growth and development and device companies. Mark heads up in the music industry, and work MIDiA’s music research and oversees with artists, labels and managers all of MIDiA’s research output. Mark is at all levels on digital marketing the author of the industry leading blog strategy and campaign execution. Music Industry Blog. He is also author We also organise and run our own of ‘Awakening: The Music Industry In events, including the Sandbox Summit The Digital Age’ the definitive account music-marketing conferences, of the rise of the digital music market. and (in partnership with Music Biz) Karol Severin is MIDiA’s lead analyst the NY:LON Connect conference for research on the mobile content in London and New York. economy. Karol’s research covers all aspects of mobile content including the mobile app economy, freemium strategy, mobile consumer segmentation, payment tactics and mobile discovery. Prior to joining MIDiA Karol gained experience in a number of marketing and research roles and as a technology start up founder. Karol is based in their Berlin office. 6

CONTENTS

THE FUTURE IS BRIGHT FOR ABOUT WIN INDIES ON SPOTIFY 4 38 JEN MASSET

INTRODUCTION WHAT AN INDEPENDENT 7 ALISON WENHAM 44 LABEL LOOKED LIKE IN 2017

BREAKING BORDERS: INDIE KEY FINDINGS INTERNATIONAL SUCCESS 8 46 STUART DREDGE

INDEPENDENT MARKET ANALYSIS CONCLUSION 10 STUART DREDGE 54 ALISON WENHAM

MERLIN TURNS 10 AND LOOKS AHEAD METHODOLOGY 16 STUART DREDGE 55

CASE STUDY: 23 CIGARETTES AFTER SEX 56 MODEL DATA

TALKING TO POWER: WHY THE INDEPENDENT VOICE MATTERS 29 STUART DREDGE WINTEL 7

INTRODUCTION

ALISON WENHAM CEO, WIN

As 2018 draws to a close, we are An average of 76% of artists choose delighted to publish the third edition to renew their contracts with their of WINTEL which maps the global independent record company. This market share of the independent is a sure sign of a successful and recorded music sector using copyright enduring creative partnership as well ownership rather than distribution as a successful business alliance. as the measurement criteria. Also causing the global industry 2017 established the highest market to sit up and take note in 2018 share for the sector since the early is the rapid rise of the so-called nineties when scores of independent emerging markets with China companies were acquired and enjoying a 36% rise in revenue removed from the indie sector. growth , Asia & Australasia seeing Increasing from around 20% in 1998 a 5.4% spike in revenue and to 39.9% in 2017, during the most streaming growth of 38%, while turbulent period of the industry’s Latin America powers ahead with history, is an astonishing achievement. overall growth of 17% and an almost 50% rise in streaming revenues. As always we make the case that measuring music industry market The speed at which these markets are share by copyright ownership gaining influence both commercially continues to be the most legitimate and culturally has surprised everyone method as distribution is and independent companies have interchangeable and involves only a played and continue to play a major modicum of risk, whereas investing role is what is a hugely positive in the creation of a copyright in the development for the global industry. first place is the biggest risk that In conclusion it has been another any artist or music entrepreneur can challenging twelve months for our take. Getting it to market is thereafter industry on a numberr of levels but a question of choice for the artist. we have emerged with powerful new Choice is now the most defining legislation to protect our interests, feature of the global music industry— fantastic growth in some unexpected artists have every imaginable route territories and increasing support to their fans, from direct uploads to from music fans who have continued full service contracts, but what is to enjoy and engage with the clear from the report is that once an amazing music coming out of the artist has signed to an independent worldwide independent community . label, they choose to stay. 8

IN ORDER TO TAKE THE PULSE OF THE GLOBAL INDEPENDENT RECORD LABEL MARKET WIN COMMISSIONED MIDIA TO CONDUCT A MAJOR GLOBAL SURVEY OF KEY INDEPENDENT LABELS ACROSS THE WORLD. (MORE DETAILS ON THIS SURVEY CAN BE FINDINGS FOUND IN THE METHODOLOGY SECTION AT THE END OF THE REPORT).

INDEPENDENT LABEL GROWTH 2017 MARKET SHARE

INDEPENDENT LABELS GLOBAL MARKET SHARE SAW A 11.3% YEAR-ON- YEAR GROWTH

THE REST OF THE INDEPENDENT LABELS MARKET, ONLY SAW A MARKET SHARE 2017* 10.2% GROWTH.

*AN INCREASE FROM 38.4%IN 2016 DISTRIBUTION GROWTH IN STREAMING REVENUE

22.4% OF INDEPENDENT REVENUE THE INDEPENDENTS SAW A 46% INCREASE IN STREAMING REVENUES. DISTRIBUTED BY MAJORS WINTEL 9

ARTIST LOYALTY ARTIST LOYALTY % OF ARTISTS RENEWING 77% WITH THEIR LABEL OF ARTISTS (BY COUNTRY) CHOOSE TO RENEW THEIR CONTRACTS WITH INDEPENDENT LABELS

ARTIST DIRECT REVENUES GLOBAL INDEPENDENT MARKET SHARE ARTISTS DIRECT INDEPENDENTS ARE POWERHOUSES IN REPRESENT JAPAN AND IN 2017 $101M SOUTH KOREA

UP FROM $94M IN 2016 OVERSEAS INDEPENDENT REVENUES

31% OF INDEPENDENT REVENUES COMES FROM OVERSEAS 10

THIS YEAR’S WINTEL REPORT IS BASED ON THE MOST COMPREHENSIVE SURVEY YET OF THE ANNUAL MARKET SHARE OF THE GLOBAL INDEPENDENT SECTOR. THE GLOBAL

THIS PIECE IS AUTHORED BY STUART DREDGE, WITH DATA INSIGHT FROM INDEPENDENT MARK MULLIGAN OF MIDIA. SECTOR IN NUMBERS WRITTEN BY STUART DREDGE

Based on respondents from North The findings tell a clear and powerful America, Latin America, Europe and story: independents are the fastest- Asia who represent between them growing sector of the global recorded annual revenues of $1.9bn, the survey music industry; they are benefiting includes companies whose revenues from the industry’s transition from range individually from less than sales to streaming, and the loyalty $1k a year to more than $300m. they see from consumers, employees and artists alike demonstrably shows the respect and moral authority they command, at a time when fairness and transparency has never been more important, nor more talked about.

Stuart Dredge

Mark Mulligan WINTEL 11

INDEPENDENT LABELS OUTPERFORMED THE MARKET IN 2017 THE GLOBAL INDEPENDENT SECTOR IN NUMBERS INDEPENDENT LABELS SAW A 11.3% YEAR-ON-YEAR GROWTH

THE REST OF THE MARKET, ONLY SAW A 10.2% GROWTH.

WINTEL /MIDiA Research Independent Market Share Model (07/17)

Independent labels grew from $6.2bn in 2016 to $6.9bn in 2017, which was THE FINDINGS TELL A CLEAR growth of 11.3% year-on-year. What’s important about that figure is that indies outperformed the overall music AND POWERFUL STORY: market, which grew by 10.2% last year. Independents also increased their INDEPENDENTS ARE THE total market share to 39.9% in 2017 with their growth outpacing that of the major labels, whose FASTEST-GROWING SECTOR revenues grew by 9.7% that year. OF THE GLOBAL RECORDED MUSIC INDUSTRY 12

MEASUREMENT OF THE MARKET BY OWNERSHIP NOT DISTRIBUTION

22.4% OF INDEPENDENT REVENUE DISTRIBUTED BY MAJORS

WINTEL /MIDiA Research Independent Market Share Model (07/17)

Nearly $1.5bn of independent label Some industry metrics count these Major-distributed independent music revenues came from labels and revenues within the major labels’ accounts for 8.6% of the total market, artists whose music was distributed market shares, but WIN believes that and 22.2% of the independents’ by the major labels—through their it is vital to measure the market not market share: it’s a significant sum in-house distributor and label- by who distributes music, but by who that should be assigned accurately. services divisions (Caroline for owns it: when independent labels Universal, The Orchard for Sony shoulder the risk of signing artists Music and ADA for Warner Music). and investing in their music, it should count towards their market share.

MAJOR-DISTRIBUTED INDEPENDENT MUSIC ACCOUNTS FOR 8.6% OF THE TOTAL MARKET, AND 22.2% OF THE INDEPENDENTS’ MARKET SHARE WINTEL 13

STREAMING REVENUES ARE GROWING STRONGLY

THE INDEPENDENTS SAW A 46% INCREASE IN STREAMING REVENUES.

WINTEL /MIDiA Research Independent Market Share Model (07/17)

By the end of 2017, 176 million Independent streaming revenues These figures also hint at another people were using music-streaming grew by 46% in 2017 to $3.1bn, and encouraging trend for independent subscription services globally, now account for just under 44% of the labels: that their investment in artists’ according to the IFPI, which was up sector’s overall income, compared long-term development, and in the by 64 million on 2016. This growth in to 33% in 2016. We’re approaching album format, is an advantage rather streaming—and in paid streaming—is a tipping point—perhaps even this than a risk in the streaming era. While great news for independent labels. year—when streaming will represent major labels expend considerable more than 50% of revenues. marketing resources to break individual tracks, indies are investing This growth is no accident: for the long term: and are developing independent labels have been quick to sustainable businesses as a result. adjust their businesses to streaming. 47% say that streaming makes their cash flow easier, but that rises to 73% for labels where streaming is already more than 30% of their revenues. 14

INDIES’ INTERNATIONAL HORIZONS ARE EXPANDING

31% OF INDEPENDENT REVENUES COMES FROM OVERSEAS

WINTEL /MIDiA Research Independent Market Share Model (07/17)

The big, global music-streaming services are providing independent THE AVERAGE INDEPENDENT LABEL music with easier access to listeners around the world, and that’s showing NOW GETS 31% OF ITS REVENUES in their day-to-day businesses. The average independent label now gets 31% of its revenues FROM OVERSEAS, COMPARED TO from overseas, compared to 69% from their home market. Note, this can vary according to the size 69% FROM THEIR HOME MARKET. of the label: some of the larger independent companies now get well over half of their revenues from international markets. WINTEL 15

INDEPENDENTS ARE POWERHOUSES IN JAPAN AND SOUTH KOREA

WINTEL /MIDiA Research Independent Market Share Model (07/17)

Globally, the independent market share was 39.9% in 2017, but unsurprisingly this varies IN JAPAN, INDEPENDENT MUSIC between individual countries, from 15.6% in Spain to 37.8% in Brazil. But two countries stand COMPANIES ACCOUNTED FOR 63.7% out: Japan and South Korea. In Japan, independent music OF THE MARKET IN 2017, WHILE IN companies accounted for 63.7% of the market in 2017, while in South Korea they took an SOUTH KOREA THEY TOOK AN EVEN even larger share: 89.2%. LARGER SHARE: 89.2%. 16

ARTISTS ARE LOYAL TO THEIR INDEPENDENT LABELS 77% OF ARTISTS CHOOSE TO RENEW THEIR CONTRACTS WITH INDEPENDENT LABELS

ARTISTS RENEWING BY COUNTRY

WINTEL /MIDiA Research Independent Market Share Model (07/17)

One of the most heartening statistics It’s also a reflection of stability The survey also offers a snapshot of from this year’s WINTEL survey within the teams at these labels the modern independent label: the concerns the 76% of artists who who are working with artists. Based average is 13.6 full-time staff, 3.2 choose to renew their contracts on this year’s survey, 42% of staff part-time staff and 97.6 artists in with independent labels when they at independent companies have their catalogue. This latter statistic expire. That’s a reflection of the hard been there since the launch of the is relevant to the positive impact that work that those labels have put in label – and bear in mind that the streaming is having on independent to help those artists develop their average label is 14.9 years old. businesses: a strong catalogue talent and reach their audience. can build sustainable revenues. WINTEL 17

ARTIST DIRECT REVENUES ARE INCREASING STEADILY

ARTISTS DIRECT REPRESENT $101M* IN 2017

*UP FROM $94M IN 2016

WINTEL /MIDiA Research Independent Market Share Model (07/17)

The definition of what we consider to be ‘independent’ is evolving in WIN CAN REVEAL, BASED ON THE the modern music industry: besides labels, it also now encompasses artists who are self-releasing their LATEST CALCULATIONS BY MIDIA music through distributors. The creative and commercial explosion of the grime genre, for example, has RESEARCH, THAT ARTIST DIRECT been underpinned by this model. WIN can reveal, based on the latest REVENUES GREW FROM $94M IN calculations by MIDiA Research, that Artist Direct revenues grew from $94m in 2016 to $101m in 2017. 2016 TO $101M IN 2017. As these artists build teams around them to fulfil various label-like functions, this section of our community looks set to continue its growth. In conclusion, another year of solid and impressive growth augurs well for the future of a sector that is expanding globally in every way. 18

INDEPENDENT LICENSING AGENCY MERLIN CELEBRATED ITS 10TH BIRTHDAY EARLIER THIS YEAR, ANNOUNCING THAT IT HAD DISTRIBUTED MORE THAN $1.5BN MERLIN TO ITS MEMBERS SINCE LAUNCHING IN 2008—WITH $500M OF THAT COMING IN ITS LAST YEAR ALONE. TURNS 10 AND LOOKS AHEAD WRITTEN BY STUART DREDGE

Merlin now represents the rights of “We’re now truly operating in a much tens of thousands of independent more global marketplace than we ever labels from 53 countries in licensing have before. All of a sudden we’ve deals with global companies gone from a market where as an including Spotify, YouTube, independent label you were running Deezer, Pandora and Facebook, at best a regional business,” he says. as well as regional streaming “In fact, most people were running services in countries including independent labels in their own town Russia, China, India and Japan. and their own country, and getting The not-for-profit agency was their music into other markets created by the independent sector needed people on the ground. It’s for the independent sector, and fundamentally different now.” its market share can now be In September, Caldas visited India for comfortably compared to the the All About Music conference, and major labels, which positions his meetings with local independent Merlin’s independent membership labels—“from Indian hip-hop to front and centre on digital music electronic music and prog-rock services alongside the majors. inspired instrumental music!”—has Merlin also prides itself on made him realise how the streaming ensuring that all its members have era’s instant, global availability of the opportunity to maximise the value music is changing a market like India. of the deals in which they participate, “It’s not one-way traffic. This with equal access to Merlin benefits isn’t a ‘new colonialism’ where regardless of a member’s size. western pop culture is colonising After the anniversary celebrations, the minds and ears of kids around CEO Charles Caldas’ thoughts have the world,” stresses Caldas, citing turned to the next decade for Merlin the example of The Leaf Label and its members, with the global in the UK, which recently signed nature of its business looming large. an Indian artist from Mumbai. WINTEL 19

“I don’t think that the history of Yet I’m meeting young label heads “Your audience can come from independent labels is littered with who grew up in Birmingham and have unexpected places now, and I think examples of UK-based labels moved back to Delhi, because they this phase from here on in is working using India as an A&R source!” think the hip-hop scene there is going out how you connect the availability says Caldas, noting that another to create some incredible music.” of that music with the data that’s independent label, Domino, has readily coming out of those platforms, “It’s not only the fact that the put out music from Indian-folk-jazz which shows you what’s happening emergence of the instant availability fusion band Yorkston/Thorne/Khan. to your music” says Caldas. of music globally has created “It’s a by-product of technology: a a truly global audience. It’s “It sparks questions about what the by-product of the fact that we now about what’s happening there shape of a label looks like; how you have these streaming services commercially in terms of how harness those opportunities; how you that are clearly resonating with independent labels are operating.” use data without being overwhelmed consumers, and are becoming by it. These all have their own Another example: Caldas notes significant commercial players within challenges, but overall it’s incredibly that an Australian label released their respective markets,” he says. exciting. We’re in a much more fluid, an album by a local folk-rock band, dynamic global marketplace.” “If you look at India with saw a track get picked up by one of streaming services like Gaana Spotify’s playlist editors in Mexico, It’s a noisy marketplace too: and Saavn, you might think it’s and a few months on that country around 20,000 new tracks get just about Bollywood music. was the band’s third biggest market, added to a streaming service complete with offers to tour there. like Spotify every day.

Charles Caldas CEO of Merlin 20

“IT’S WHAT INDEPENDENT LABELS HAVE BEEN GREAT AT THROUGH THE HISTORY OF RECORDED MUSIC: FINDING A GENRE, A SCENE OR A PARTICULAR STRAIN OF MUSIC, AND DEFINING IT BY MAKING SURE IT CAME TO MARKET FOR PEOPLE TO DISCOVER.”

Cutting through that noise can seem “In this playlist-driven world, you In the streaming era, there are daunting for an independent label, see major labels chasing those no ‘chart walls’ or ‘front racking’— but Caldas thinks some traditional high-volume RapCaviar or Today’s terms that younger artists and label principles will serve them well. Top Hits tracks that really spike. But founders may not even understand— independents haven’t really moved and the 80% of revenue generated He looks back to the heyday of labels from their strategies of building long- by streaming services comes from a like Chess, Blue Note and Motown—or term careers for artists over several much deeper repertoire of music. more recently 4AD, Ninja Tune and releases, and allowing those artists Erased Tapes—when fans knew what “The hits are always hits, and the to develop in an environment where sounds and scenes labels represented streaming volumes for Drake and they’re comfortable. I really do believe (and in many cases defined). other big artists are incredible. But we’re entering an era where that kind there’s a lot of activity happening “You knew if you bought a Motown of long-term commitment to your further down the food chain, record, you weren’t going to be getting artists is going to pay dividends.” which is driving an enormous Perry Como or Dean Martin! It was a One reason for that, Caldas believes, amount of value,” says Caldas. brand, or a cultural touchpoint, that is that the shape of the music market defined a whole genre. And that’s what He also thinks that the nature is different from the days when labels like Ninja Tune and Erased of streaming—particularly the physical retailers would make 80% Tapes are doing now,” says Caldas. algorithmically-personalised playlists of their money from a narrow range such as Discover Weekly, Release “It’s what independent labels have of releases that were in the chart, Radar and Daily Mix on Spotify, or My been great at through the history of out that week or on special offer. New Music Mix, Chill Mix and Friends recorded music: finding a genre, a Mix on Apple Music—is levelling the scene or a particular strain of music, playing field for independent artists. and defining it by making sure it came to market for people to discover.” WINTEL 21

“Your experience opening up that app That’s not so different from Spotify’s “But when the market starts to peak, is now totally defined by whatever market cap of more than $30bn, and they can’t just run on subscriber- you’ve been listening to in your history. but considerably smaller than growth any more—when you’re If you’re an electronic-music fan, you the current market caps of Apple getting closer to a more mature won’t be seeing the new Katy Perry (more than $1tn), Google’s parent marketplace—that dynamic could record. It’s driving discovery deeper company Alphabet ($818bn), Amazon become challenging when you’re down the food chain,” says Caldas. ($943bn) and Facebook $478bn). a small industry in the hands of a much bigger entity, and where those “Consumers seem to be digging deeper That’s a big change from the massive tech companies are going to down into the crate, as it were, helped days when the biggest record start competing with each other for by these playlists. And that is playing companies were always bigger (in consumers on price and content.” into the favour of the independents: value) than the biggest retailers it’s creating opportunities for them distributing their music. Caldas thinks that the independent that weren’t really available before. music community should be thinking “Now our key retailers are tech And that’s creating more value. It’s about this now, even if such a scenario companies that could in some now easier to have a path to listeners is still several years away. He points cases inhale the entire music that totally bypasses the major-label to what happened with physical- industry into their business system than it’s ever been before.” music retailers in the past: when the without burping!” says Caldas. market matured, their relationships As he looks ahead to the next “On the positive side, it’s great with labels “became fairly attritional decade of Merlin, Caldas does see that those companies recognise around margin, and quite adversarial”. challenges as well as opportunities. the value of music within their The fact that the music-streaming Could the same happen with the big offerings, and are making real market is dominated by large technology companies in the music- investment to create attractive technology companies, for example. streaming space? Caldas hopes that music propositions for consumers, such a prospect can be fended off by Universal Music Group has been which in turn drive value to us.” building healthy relationships with valued at between $22bn and them now, to keep them as “good $40bn in recent times, depending partners” in the longer term. whose prediction you believe.

“IT’S NOW EASIER TO HAVE A PATH TO LISTENERS THAT TOTALLY BYPASSES THE MAJOR LABEL SYSTEM THAN IT’S EVER BEEN BEFORE.”

CHARLES CALDAS CEO OF MERLIN 22

“They’re going to have the pressure That’s one area where Merlin is “In the long term, I hope that to start bundling different types of already at work, exploring the the ambition and creativity and repertoire into single subscriptions, potential to build technology for its entrepreneurship really wins as we’re starting to see Amazon doing. members to use, and ensure they out. And independent labels are You’ll see music competing against don’t fall behind what the major particularly good at that,” he says. television and film and games in labels can do with data to gain an “In the last 12 months, Merlin multi-content subscriptions. So how advantage in the market. The agency has had our biggest influx of new do you preserve value?” says Caldas. is also positioned as a long-term members since the year we started partner for independent labels, since “That’s the sort of question we need operating, which I think is a strong (unlike digital distributors, who are to be thinking about, as well as what illustration of that desire from currently hot acquisition targets for does voice-activated music within labels to forge their own destiny. major labels) it will never be sold. the car mean for consumption, and If you’re a serious independent for the access to market for the He comes back to the inherent that has ambition and enough independent sector? And how well innovation within the independent scale to be self-determining, it’s equipped are we to use all of the data community as a reason for optimism easier than it has ever been to coming out of these services to our about the future, however. play in that global marketplace.” advantage, and not be overwhelmed or distracted or sidelined by it?”

INDEPENDENT BUT NOT ALONE. At the SoundExchange Companies, we focus on innovation so the independent music community can focus on music.

SX_WintelReport_Ad.indd 1 7/26/18 9:06 AM WINTEL 2323

CASE STUDY: CIGARETTES AFTER SEX WRITTEN BY STUART DREDGE

INDEPENDENT BUT NOT ALONE. At the SoundExchange Companies, we focus on innovation so the independent music community can focus on music.

Greg Gonzalez Lead Singer

SX_WintelReport_Ad.indd 1 7/26/18 9:06 AM 24

US BAND CIGARETTES AFTER SEX HAVE BEEN AN INDEPENDENT SUCCESS STORY OF RECENT YEARS, BUILDING A FERVENT FANBASE ACROSS THE WORLD.

It started in 2015 when their “None of us really wanted to mess tracks ‘Affection’ and ‘Nothing’s with that by using any overly clever Gonna Hurt You Baby’—the former marketing techniques, but rather stick uploaded by a fan and the latter to what’s worked and amplify with on their own channel—caught an traditional media, a strong touring algorithmic wave on YouTube which strategy, building the fanbase, feeding developed into a long-term surge. them new music. It’s kind of old school in that sense,” says White. The band and their manager Ed Harris (of Blue Raincoat) decided “It was really just always focused to go with this flow, which saw fans on the music with a very minimal feeling like they were discovering aesthetic, albeit in a very deliberate Cigarettes After Sex’s music rather and considered way, and in that than having it pushed at them. sense ‘discovery’ has continued to be a really big driver in the “We decided to let this happen: not trajectory, with us really focusing to force things, but to just support our marketing plans on that and what was already happening out fans then feeling a lot of ownership there, and then to bring out new over the band which is important.” songs. We didn’t sponsor posts and in the early days we didn’t even do ads on YouTube,” says Harris. “We didn’t want to be coming in with some sort of pitch or advertising— something that was going to get in the way of that experience. It wasn’t just happening from word of mouth: it was happening from the algorithms.” For the first year, it was the band and Harris making these calls, before signing with label Partisan Records – which was fully behind the strategy of organic growth. Zena White, from Partisan Records, agrees that there was a strategy of working with the algorithmic buzz.

Ed Harris Band Manager WINTEL 25

Zena White Managing Director of Partisan Records

From YouTube, the band put their Touring also went against some White praises the band’s willingness music on Spotify and other streaming of the traditional expectations of to work hard on the road, and not services, and saw all boats rise as how a band can scale. European just in traditional markets like a result. They now have nearly 1.9 promoters were keenest to book London and Paris, but in cities like million monthly listeners on Spotify the band in those early days, but Prague and Lisbon. She also links and more than 423,000 subscribers interest from Asia led to Cigarettes the band’s willingness to get out on to their YouTube channel. After Sex touring there in 2017. stages across the world to some of their success selling music. “It’s a very broad audience: it’s not just Interest has built to the point one category of person or subculture. where they are now playing a “It was the physical numbers that And it’s all over the world: it happened 5,000-capacity gig in Seoul, on only really surprised us on the rollout—we globally very quickly: just people their second visit to South Korea. always knew that France would be a connecting to this music and this top market for us, everything about India is another country where aesthetic. It’s nice that something can it is what the French love so it’s no Cigarettes After Sex picked up a still take off in that way,” says Harris. wonder that Francois Hardy has been following. In December 2017, the band a huge champion—but there is a The international success of played the Bacardi NH7 Weekender really high proportion of international Cigarettes After Sex hasn’t just festival in Pune, after fielding plenty sales from secondary and tertiary been about streaming: it’s also been of requests from fans there who’d markets such as Poland and Thailand about touring, from a tour of 150-200 discovered their music on YouTube. where we’ve sold over 10k and 1k capacity venues in Europe in early “The festival organisers couldn’t units respectively,” she says. 2016 that was driven by promoters believe how many fans came out contacting Harris wanting to book “There are all these individual for the band, but if you look at our the band, based on the online buzz. stories of countries,” adds Harris. YouTube stats, in user-generated “I really do think Cigarettes is just an “Six months later it was 500-ticket content India is number one. And amazing test-case for what happens shows, and by the end of 2016 on Facebook, the biggest pie-wedge when a band breaks on the internet we’d done 1,000 people at one or after the United States is India: worldwide. Although not everyone two shows,” he says. “And it all of the 529,000 fans, more than trusts it: one label we talked to said happened very organically, with 50,000 are from India. There’s a their digital analytics team thought promoters reaching out to us.” huge fanbase there,” says Harris. our numbers were fake, because so many were from India. I said if that were the case, we wouldn’t be selling shows out all over the world!”

Ed Harris Band Manager 26

IT’S IMPORTANT TO STRESS THAT THE SUCCESS OF CIGARETTES AFTER SEX IS NOT ABOUT ‘VIRALITY’— IT’S ABOUT THE MUSIC ITSELF.

It’s important to stress that the “Some of this is untried territory: Playlists on streaming services have success of Cigarettes After Sex there isn’t a model for this! In a also played a role, with Cigarettes is not about ‘virality’—it’s about lot of ways, there isn’t a model for After Sex’s music suiting some of the music itself. “It’s the type of anybody any more: once there’s the most popular mood-focused beautiful music that cultivates both an initial spark and you’re up and playlists, as well as making its way an obsessive fan base and a huge running, it’s up to you to build it,” onto the big new-music playlists on amount of passive listeners, so it’s he says. “And yes, you can have an services like Spotify and Apple Music. the perfect storm really,” says White. amazing, international success in the White, however, says that this indie sphere, and not need to move “We had theories about the name is not a ‘playlist-driven’ success to a major. Of course, you can decide initially being clickbait, but honestly story. “I can tell you that of their 1.9 to make that move if you think it’s the engagement in the actual music million Spotify monthly listeners, right for the artist, but a band like is too high for that to be the case. 43% of plays are coming from own Cigarettes show it’s not a necessity.” There are a lot of repeat listens playlists and libraries, 20% from and we’ve been running analysis This even extends to some the band’s profile and only 14% on search terms to find that hardly traditional areas like radio. from Spotify’s editorial,” she says. anyone searching ‘cigarettes’ or Cigarettes After Sex might not seem “I’ve seen other examples where ‘sex’ stays on a play for longer than like a stereotypical ‘radio-friendly’ a band has a lot of plays but it’s a few seconds. 43% of 1.9million band, but Harris says he has been mostly Spotify editorial. Which monthly Spotify listeners are surprised at how stations around means it’s mostly passive listening from user library saves and the the world have backed the band. from the platform’s own playlists highest YouTube driver is search.” “I’ve been surprised at how well we’ve and algorithms—which means it’s Harris sees the band’s growth as proof done at radio, from the BBC stations in a struggle to build an audience.” that remaining independent is a viable the UK to KROQ in the US. But having Much of the band’s success has road to a global fanbase, contrary to the groundswell of the algorithms been organic, but that doesn’t some traditional assumptions that this and fan support was definitely a mean there hasn’t been a lot of would require the kind of marketing powerful way. Satellite radio didn’t thought behind the process from clout only a major label could provide. pick up on the song until the record both label and management. had been out a year, but once they picked it up, it became a bona fide hit. And a lot of the US commercial stations look at that now, so we had people reaching out to us about pushing ‘Apocalypse’ to commercial radio. That wasn’t even in my mind to try to go after for this band!” WINTEL 27

ACROSS LAST YEAR (OCT 2017—OCT 2018) INDIA HAS BEEN SECOND SOURCE OF VIEWS FOR OFFICIAL MUSIC VIDEOS IN THE CHANNEL

PARTISAN RECORDS’ DATA SHOWS HOW CIGARETTES AFTER SEX HAVE BEEN REACHING FANS ON YOUTUBE IN INDIA, POLAND, MEXICO AND TURKEY AMONG THE USUAL MAJOR MUSIC MARKETS.

Data supplied in October 2018.

“We’ve spent more time analysing Harris stresses that for all the viral “That doesn’t mean that we don’t still and hypothesising on this campaign fame that came Cigarettes After Sex’s need or want those traditional media than we have spent on some of way, it’s the quality of the band’s formats to come on board—of course our most active campaign setups! music (and their performance of it live) we’re focused on that too—but they’re That’s really the key... you end up that matters in the long run. “It always not the gatekeepers anymore.” having to sit on your hands and think comes back to live. It’s amazing what intelligently about what is working YouTube and playlists and the internet rather than rolling out the same has done for the band, but once spending budgets which is actually that’s all up and running, live is the really fun and makes for some best way to connect with your fans.” fantastic conversations,” says White. White says that the relationship “We have a great relationship with with fans has also been key. “Across Ed and Blue Raincoat which really our roster, not just with Cigs but feels like we’re all invested, and also with IDLES, we’re learning they are cool to try new stuff, but that it’s just as important to nurture none of us want to spend on things and embrace communities of fans that don’t have any impact.” than it is to go after the traditional methods of getting a ‘hit’. Social media has replaced traditional editorial in that way,” she says. 28

www.musically.com

is delighted to be able to off er our subscription information service to all independent label employees worldwide free of charge courtesy of sponsorship from FUGA and Spotify and support from WIN

In association with

#MarketMusicBetter

To keep up with the latest developments in the music business and learn more about digital marketing just sign up below: https://MusicAlly.lnk.to/IndieLabelSignup

Music Ally is also off ering WIN member labels a special introductory rate of £299/$399/€349 for one of our artist digital health checks where we take a deep dive into:

• SEO • Website Analysis • Audit of Social Profi les • CRM and email marketing • Data Collection • Data Ownership • YouTube • Spotify and streaming services

To take advantage of this off er please contact [email protected]

MusicAllyWIM-Ad.indd 1 20/07/2018 16:26 WINTEL 29

SEPTEMBER 2018 WILL GO DOWN IN HISTORY AS AN EXTREMELY POSITIVE MONTH FOR THE MUSIC INDUSTRY, TALKING TO POWER: THANKS TO THE PROGRESS MADE ON NEW LEGISLATION ON BOTH SIDES OF THE ATLANTIC OCEAN. WHY THE INDEPENDENT VOICE MATTERS

WRITTEN BY STUART DREDGE

In the US, the Music Modernization The music industry had campaigned Act (MMA) was passed unanimously in support of Article 13, seeing it as by the Senate, in a process under a way to fix the problem of the ‘value which a single objection from a gap’ between the amount of music senator could have seen the bill being consumed on platforms like delayed—and possibly even falling by YouTube, and the royalties which they the legislative wayside altogether. pay out to music rightsholders. The MMA is the biggest revamp of Two pieces of legislation, and two US copyright laws for decades, and success stories for the music industry, includes changes that will simplify although both the MMA and the the licensing process for music- European Copyright Directive have streaming services; ensure artists more steps to go before they become and songwriters receive royalties law. But September’s progress for streams of songs recorded also illustrated something else: before 1972; and introduce a ‘willing the importance of the independent buyer / willing seller’ structure community’s voice in the lobbying for satellite-radio licensing. that led up to the crucial votes. In Europe, meanwhile, the European From A2IM in the US to IMPALA and Parliament approved its take on a independent-label bodies across new copyright directive, including Europe, the independent voice is being politicians voting to approve the much- heard loud and clear in Washington discussed Article 13 of the proposed DC, Brussels, Strasbourg and legislation, which would make anywhere else where politicians and “online platforms and aggregators policymakers are at work. Our sector’s liable for copyright infringements”. credibility with these decision-makers is at its highest level ever, and it is driving real change that benefits our global community of labels and artists. 30

“THEY ALL HAD AN INFLUX OF DOLLARS THAT THEY DIDN’T HAVE BEFORE. THEY WERE ABLE TO LEVERAGE THAT INTO THEIR BUSINESS AND INTO ARTIST DISCOVERY AND DEVELOPMENT.”

STUART JOHNSTON PRESIDENT OF CIMA

CANADIAN BEGINNINGS “Parallel to that, we were successful in getting the government to mandate Tracing this political clout back takes that radio channelled a proportion you to the early 1970s in Canada, of its revenues back into the music where an informal association of industry. That got some great independent music companies airplay and visibility of our artists came together for what would on Canadian radio, coast-to-coast, later be formalised as trade body and it also provided the royalties CIRPA—which has since evolved for that airplay to our artists, so it into the Canadian Independent created a stronger revenue stream Music Association (CIMA). for those artists on the radio,” says Stuart Johnston, president of CIMA. In the 1980s and 1990s, it successfully lobbied on the issue of quotas for “Just as importantly, because the the amount of Canadian music that radio stations were mandated to also was played on the radio, with those channel a proportion of their revenues quotas starting at 20%, then rising back into the industry, it actually to 25% and ultimately 35%— and strengthened the infrastructure that 50% on public broadcaster CBC. we have in Canada, and it allowed our industry to have the resources that they were then able to leverage to invest in more and more artists.”

Stuart Johnson President of CIMA WINTEL 31

“That raised the bar for our industry COOPERATION AND LEGISLATION “The voice of the independents is and it created a very strong foundation different to the voice of the rest of and infrastructure of companies Fast forward to 2018, and you’ll the community, and it adds huge like record labels, managers, find a similar sense among the value. But clearly, working together publishers and studios [in Canada]. bodies representing independents is very important,” agrees Helen that their advocacy can benefit the Smith, executive chair of IMPALA. They all had an influx of dollars that entire industry. That’s why both they didn’t have before. They were able “In Europe we have various coalitions A2IM and IMPALA worked closely to leverage that into their business and on the value gap, competition, the with bodies representing major into artist discovery and development.” relationship with platforms… We have labels, publishers, songwriters and a fluid approach: the composition of CIMA also secured some important others in the run-up to September’s our coalition will change according concessions the last time Canada’s crucial MMA and Article 13 votes. to the issue that we’re working on.” Copyright Act was reviewed, six years “The biggest thing was being able ago, and continues to be a prominent, Smith adds that particularly when to pull together with the rest of credible voice in music-related an issue sees the music and tech the industry. There are things we public debates in its homeland. industries on opposite sides of don’t always agree on, but you the debate, as it did with Article can’t get anything done in America 13, the role of independents unless you act as a single music- is even more important. industry unit. So we’ve been pretty successful in doing that over the past couple of years,” says A2IM CEO Richard James Burgess.

“THE VOICE OF THE INDEPENDENTS IS DIFFERENT TO THE VOICE OF THE REST OF THE COMMUNITY, AND IT ADDS HUGE VALUE.”

HELEN SMITH EXECUTIVE CHAIR OF IMPALA 32

Helen Smith Executive Chair of IMPALA

“It can sometimes be convenient for “This was our chance to communicate “It took a lot of education, but opponents to try to portray a debate to those who were voting that this they finally know the distinction as polarised around ‘big tech versus was their opportunity to level the between indies and majors. big music’. That alienates all the playing field for everyone. Platforms At the same time, it is still a constant other actors who are concerned, would not just be paying those education process in government—be and detracts from the validity who are big enough and organised that at the provincial level or the of their points,” says Smith. enough to negotiate agreements, federal level—to re-educate them but also those who are smaller.” “For us, it was important to ensure about who we are and what we decision-makers understood that BUILDING CREDIBILITY do,” he admits. “Bit by bit, we are Article 13 is important for everyone chipping away. They [the government] involved in the creative chain: whether How did we get to this point? In are certainly more educated today you’re big or you’re small, not yet Canada, the US and Europe alike, than they were five years ago.” known or already established.” the first steps were educational: Smith underlines the key role that Both the MMA and Article 13 explaining to policymakers what national associations play in getting are examples of legislation the independent community is; how messages across in Europe, building affecting the entire music industry and why it differs from the major relationships and influencing local which could, nevertheless, have music companies; and why its voice decision makers. “Through this a particularly big impact on deserves to be heard separately, network our campaigns become independent labels and artists. as well as alongside them. more than the sum of their parts.” “Without this legislation, the chances In Canada, where the independent of individual musicians or labels being market share has grown from 20% able to negotiate and have a say in to around 25% over the last eight how their music is used online are years, Johnston sees progress. minimal, compared to the chances you would have as a big operator,” says Smith, of the European plans. WINTEL 33

Burgess points out that this kind of education process isn’t just for governments: it’s just as “OFTEN WHEN A DIGITAL necessary for new companies entering the digital music world, from tech giants like Amazon and SERVICE STARTS UP, THEY Facebook to smaller startups. “Often when a digital service starts up, HAVE ALMOST NOBODY they have almost nobody there who knows much about music. Some of them still don’t! They’re tech people, THERE WHO KNOWS y’know,” says Burgess. “So they look at the landscape, and [major-label] people say ‘we represent 85% of all MUCH ABOUT MUSIC.” recorded music’. They distribute 85% of all music, in America. But they don’t own 85%—they own about 62%, and RICHARD JAMES BURGESS PHD we own about 37.32% according to the CEO OF A2IM last numbers that Billboard published.” “If independents choose to deliver their music through the major labels, it doesn’t give the majors ownership over that. Saying the majors own 85% of the music market is like saying FedEx, the US Postal Service and UPS own 100% of online retailing! They deliver 100% of online-retail goods. But they don’t own it.” Burgess’ point is that it’s the role of local bodies like A2IM as well as WIN on the global level to correct any misapprehensions among new digital services, as well as policymakers. “We have been really active in expressing the numbers, so that the digital services are aware they don’t just have to deal with the three majors and deliver us crumbs: giving them 85% of the money while leaving 37% of the market to live on the other 15% of the money,” he says.

Richard James Burgess PhD CEO of A2IM 34

ACCESS TO FINANCE “There’s a huge multiplier effect Exports are a key strategic goal when you have a guarantee behind for CIMA. A decade ago, it ran Building the political credibility you. Banks are more comfortable three export missions a year for of the independent community and they will lend more. You can its members to The Great Escape has been about more than its use finance to grow, and that’s in the UK, SXSW in the US and market-share within the music what’s important to the independent MIDEM in France. Now it runs more industry. It’s about explaining its [music] sector,” says Smith. than 20 missions a year under the importance to the wider economy. brand of Music Export Canada. “We need to have more medium- “The independents are small and sized companies to strengthen the Access to finance is a key advocacy medium-sized companies. And sector for the longer term. We need point in the US too. “I see it when a there’s certainly a sense in Congress to grow the missing middle! And label gets started, has some success, here that small and medium-sized that’s something the EU has been and then gets snapped up by a major businesses, as they say, are the looking at for a long time across label. We want to extend the ability engine of the economy,” says Burgess. multiple sectors: we don’t have to our labels and even independent enough medium-sized companies.” artists who are self-releasing “Job creation comes from small to be able to stay independent if and medium-sized businesses, In Canada, too, access to finance they choose,” says Burgess. more than large businesses. has been a rallying point for the They really do add up.” independent community. Johnston “They might still sell to a major says that under the last government, label, if they’re doing it for the right It’s the same in Europe, with Smith there was a threat that the Canada reasons and getting a fair deal out saying that an important aspect Music Fund—a $26m annual fund of it. But I hate to see people selling of IMPALA’s work in recent years that goes into the music industry— a label they’ve worked on for 30 or has been working on issues like would be scrapped. But CIMA’s 40 years, just because there aren’t access to finance, which led to a campaign to avoid that paid off. good alternative options available.” new EU initiative called the ‘Cultural and Creative Sector Guarantee “What we got was a Conservative Facility’—which encourages banks government to make that fund to lend to small and medium-sized permanent. That was a huge companies in the cultural and success,” he says, adding that CIMA creative industries, music included. also convinced the new government to commit to a new, annual export fund for the creative industries, worth $25m a year over five years.

“WHAT WE GOT WAS A CONSERVATIVE GOVERNMENT TO MAKE THAT FUND PERMANENT.

THAT WAS A HUGE SUCCESS”

RICHARD JAMES BURGESS PHD CEO WINTEL 35

“THOSE WHO WANT TO CONSOLIDATE HAVE TO JUSTIFY WHY IT IS ACCEPTABLE. IT’S NOT FOR THOSE WHO OBJECT TO SET OUT WHY IT SHOULD BE STOPPED”

HELEN SMITH EXECUTIVE CHAIR OF IMPALA

TACKLING CONSOLIDATION These are points that IMPALA was “That seems obvious now! But in able to make that had never been actual fact, that was a big decision in IMPALA works across a range of heard before, and that completely the court: it was the first time they’d issues, but it’s the organisation’s changed how the EU looked at ever said that. One EU law firm said role in speaking out against consolidation in our market.” that merger control procedure owed consolidation of the major companies a debt of gratitude to IMPALA.” 2004 saw IMPALA file a class-action in our industry that has clearly in relation to Sony and BMG’s plans highlighted its impact, down the FIGHTING FOR FAIRNESS to merge, after the Commission years: from its opposition to Time had raised serious concerns, then Warner and EMI’s planned merger— One topic that comes up regularly in cleared the merger. The lawsuit which was abandoned in 2001. the interviews around independents’ was an important factor in the 2006 political clout is the idea of fairness, “This was the first time that the people decision by a European court ruling and a moral authority that carries who had to make decisions could against that clearance, although on weight with policymakers. actually hear from the independents appeal, that decision was reversed about what they thought the again in 2007. Ultimately Sony “There is a moral authority: we are impact would be. That was totally ended up buying out BMG and the seen as ethical,” says Burgess, citing transformative,” says Smith. litigation was set aside before a the Fair Digital Deals Declaration, final decision could be reached. which was launched by WIN in July “Never before had anyone been to 2014 as a commitment by independent the Commission to say hold on, Even so, IMPALA’s case had longer- labels to treat their artists fairly in have you thought about what this term consequences. “The court found agreements based on the exploitation might do for competition? Have you no presumption in favour of mergers. of their work on digital services—for thought about the impact this might Those who want to consolidate have example, when advances are paid have on the charts, or on whether to justify why it is acceptable. It’s not for a catalogue, or when there’s a or not you can get on the radio? for those who object to set out why windfall from equity in a company (for it should be stopped,” says Smith. example Spotify) that goes public. 36

“The perfect example of that is COLLECTIVE ACTION “Sure, I can survive as an independent that Merlin had a plan in place to label, and even become very wealthy pay out the Spotify equity way ahead Given the success stories from as a label owner if I do well. At the of the listing, and they paid out the independent lobbying over the last same time, there are certain big equity within a couple of days of the several decades, the benefits for this issues that I can’t address on my own. listing. And then Sony Music sector of a unified voice may seem You can negotiate the best deal in the followed suit,” says Burgess. obvious. However, there was some world, but if there’s legislation—or “Merlin set an excellent precedent.” convincing to be done in the early a lack of legislation—in place that days of all these organisations. causes you to make 20% less across Here, too, there is collaboration with the board, if you negotiated 5% better other companies within the industry. Burgess refers to fierce independence than your competitor, you’re still Three years ago, when new rates as a wider American quality, including 15% worse off than you should be!” were being set for ‘non-interactive’ for small and medium businesses music-streaming services in the US, – music included. “It’s built in to Helen Smith agrees, and says that a like Pandora, A2IM pushed back at the constitution of the country! similar evolution in attitudes happened a suggestion that in terms of royalty And so I think that when A2IM was among European independent payments, independent tracks might formed, there was quite some music companies, at different paces be worth less than major-label tracks. resistance to doing it,” he says. according to the country, with some organisations in existence for 40 years “That was very upsetting to our “The idea of collective action versus and others starting more recently. sector! But we started having the American capitalist sensibility of regular meetings with the RIAA and ‘we can do this and build ourselves “We can see now that the independents the major labels, and were able to up and have all the clout we need’. across Europe believe that there is a establish between us that we would But it has become obvious to even value in collective action, on a number not view things that way. The majors the biggest independent labels that, of different levels: commercial, said, to their credit, a copyright’s a in an era when the music industry political, financial… we can see that copyright: an independent label’s does not control its own distribution, the independent sector understands copyright is worth as much as a there are issues that are bigger than and feels there is a direct tangible major label’s copyright,” he says. even the biggest independents.” benefit in that,” says Smith. “That’s the benefit of having a trade “They understand that collective association like A2IM, and it shows action doesn’t mean that you are the enormous importance of having losing your identity. Obviously, all collegial relations within the business. the independents are competing We don’t always see eye to eye with fiercely with each other, but at the majors, but we need to be able the same time they can benefit to sit down and work together… Look from collective intelligence. at the MMA. The music industry’s had a drought for decades getting nothing through. Suddenly, when we all stand together, we do.”

“NOW, I THINK PEOPLE ARE PRETTY CLEAR, THAT THE INDEPENDENT SECTOR IS A FORCE TO BE RECKONED WITH!”

RICHARD JAMES BURGESS CEO WINTEL 37

Photography credit: Christian Wiediger

FACING THE FUTURE “Clearly the most important part of “We are also very high risk-takers. streaming for artists is the playlists In Europe, we account for 80% of With this unity secured, there are on those platforms. We are wrestling all new releases, and that gives you more battles to be fought by all with that,” says Johnston. “While a certain clout when you negotiate, these organisations. IMPALA is streaming services are global, if you and when you speak on behalf of the busy on Sony’s attempt to gain sole are operating in any territory, I think sector—because the sector is very, control over EMI Music Publishing its strength should echo that of radio. very creative. We are faster, better, and is also working on a new Reflect the local scene—because that smarter and we are leaders of the EU regulation that is intended to is where people live and breathe.” music sector today. And that’s a very deliver fairness for businesses powerful, and a very compelling story.” Underpinning all of these initiatives dealing with online services. and campaigns is a strong awareness Burgess agrees: “Now, I think people In the US, A2IM is training its sights that the independent community is are pretty clear, that the independent on the long-standing complaint over strong, credible and respected in sector is a force to be reckoned with!” terrestrial radio’s lack of royalties the corridors of power. A message it paid out for music recordings played does no harm to continue reminding on the airwaves, while in Canada, those corridors’ inhabitants of. CIMA is ensuring the government “It’s important to be very open about delivers on its promise of a new our strengths. We adapt and we keep review of the Copyright Act, and moving—and that’s one of the reasons mulling whether its radio-quota why we are successful.” says Smith. lobbying successes of the past could be revived for the streaming era. 38

WITH 180 MILLION MONTHLY ACTIVE USERS, INCLUDING 83 MILLION PAYING SUBSCRIBERS, SPOTIFY’S REACH IS COLOSSAL; BUT ITS COMMITMENT TO THE FUTURE INDEPENDENT LABELS AND ARTISTS HAS REMAINED CORE TO ITS BELIEFS. IS BRIGHT FOR INDIES ON SPOTIFY WRITTEN BY JEN MASSET SPOTIFY

I joined Spotify in 2017 because I share PLAYLIST SUBMISSION GIVES these same beliefs. I’ve spent over 25 EVERY ARTIST A SHOT years working with the independent music community, from record Playlist Submission allows artists stores to labels to the A2IM trade and labels to submit unreleased organization. So naturally, I’ve been music directly to our editorial team impressed with how Spotify has fully to be considered for a playlist. It’s a and fairly embraced the indie world. simplified and systemised way for All artists and all labels are incredibly them to, in one click, reach our global important– Spotify wouldn’t be a team of curators algorithmically. global platform without a variety of This brings everyone to the table in sizes and types of content owners. But a way that wasn’t possible before. there are specific needs and desires It also helps us find music in all unique to indies, and now that I’ve the niches and sub-genres and joined Spotify myself, I work with an stay up to speed on global trends incredible team that’s dedicated to we may not have had visibility into supporting them. As Spotify’s Head otherwise. For example, a genre of Independent Label Support, part like Digital Maskandi… how would of my job is to ensure that indies I have otherwise discovered that? are best utilizing the platform’s many helpful tools and features. Here are a few of my favourites.

Jen Masset Global Head of Independent Label Support at Spotify WINTEL 39

WITH SPOTIFY CODES, MUSIC IS SPOTIFY FOR ARTISTS & SPOTIFY NOW IN BETA: UPLOAD YOUR MUSIC JUST A SNAPSHOT AWAY ANALYTICS OFFER ULTIMATE TO SPOTIFY Spotify Codes offers a new and CONTROL One of the top-requested features easy way to share Spotify content Spotify for Artists and Spotify Analytics from artists has been the ability to with your fans. It works like a QR are hugely important. They make it upload music directly onto Spotify. code: You just enter the link from so that artists and their teams can Spotify for Artists recently unveiled a playlist, song, or anything else at maintain control of their music. It’s a feature that does just this, and is SpotifyCodes.com, and place the really simple to see song stats and now being beta tested by a number resulting image onto any marketing data, which helps artists get a sense of of US-based DIY independent artists. materials. Fans can then scan it and their audience. They can also submit The feature will roll out to more artists immediately access it in Spotify. songs for playlist consideration, in the near future, enabling them to control their profile to better engage deliver their music straight to Spotify, with fans, promote their work, and plan for the perfect release day, and really get the most out of Spotify. enjoy full control over their metadata. 40

PLAYLIST SUBMISSION GIVES The labels and artists that I’ve seen “WHEN ARTISTS really thrive are the ones who’ve EVERY ARTIST A SHOT invested in artist development. We, In the overall ecosystem of the music as a platform, can enable discovery, AND LABELS industry, streaming plays an extremely but when someone hears that artist, important role. But it’s not the be-all they want to know more about them, and end-all. You can’t just make your what they stand for, what their EMBRACE music available on streaming services story is. There should be strong and then go to a deserted island and branding, visuals, and personality retire. You should be out there touring, conveyed quickly and easily. That’s STREAMING IN you should be out there releasing how you really succeed, and Spotify merch, you should be out there on provides artists and their teams with socials, engaging with your fanbase. tools to help make that happen. THE RIGHT WAYS, When artists and labels embrace Spotify will always be an ally for streaming in the right ways, exposure independent artists and labels. can increase exponentially. It helps We make it easy for them to tell their EXPOSURE you sell more tickets and more vinyl, stories in their own voices—and and it’s going to help you engage with to do that on a scalable level. Our more fans on social media, because flexibility and options allow them to CAN INCREASE people have better opportunities to get out there and find their fans. We discover your music and to enjoy it. have been and will continue to be EXPONENTIALLY.” their partner on the road to success.

HOW FANS CAN DISCOVER WEEKLY: NEW MUSIC FRIDAY: DISCOVER YOUR MUSIC A weekly round-up of songs that A flagship playlist that updates On top of creating tools and Spotify thinks fans will love based weekly on Fridays with the hottest resources to help artists and labels on their listening history and that new songs across many artists thrive, we’ve also created endless of other Spotify fans with similar and genres. I love discovering the ways for your fans (and future fans) tastes. It refreshes every Monday latest and greatest each week. and gets even better the more to discover more of your music. RELEASE RADAR Here are a few of my favourites: you use the platform. It’s helped me find some amazing songs and artists I probably wouldn’t Like New Music Friday, but have discovered on my own. personalized. It’s my favourite feature. I’m always adding tracks DAILY MIXES: from it into my own personal playlists. I always recommend The perfect line-up of tracks, based that artists encourage their fans on the different styles of music to click the “Follow” button on the user regularly listens to, ready their artist page. That guarantees to play at the touch of a button. that their new music on Spotify Every user can have up to six, and is automatically added to their I’m obsessed with all of mine. followers’ Release Radar playlists. WINTEL 41

ESTABLISHED: 1996 HEAD OFFICE: HAMBURG, GERMANY FOUNDERS: JEN THELE SPOTIFY CASE CURRENT ROSTER: ATB, SCOOTER, LOUD LUXURY, EL PROFESSOR, LOST FREQUENCIES STUDY: KONTOR RECORDS WRITTEN BY JEN MASSET SPOTIFY 42

When I think of an indie label that’s AS A LABEL, YOU’VE TAKEN FULL truly embraced all that Spotify has to “KONTOR offer, I immediately think of Kontor ADVANTAGE OF ALL THAT SPOTIFY Records. Founded in Germany in HAS TO OFFER. CAN YOU TELL 1996, Kontor grew from Hamburg’s ME MORE ABOUT ITS IMPACT? IS HEAVILY illustrious dance scene as an offshoot of the popular nightclub of the same Streaming has developed into name. With their own “Kontor Top of a hugely important part of our UTILIZING the Clubs” playlist boasting over 400 business, so we invest considerable thousand followers, Kontor is heavily time and energy in getting this utilizing Spotify’s tools to expand their right. We are always eager to learn SPOTIFY’S reach and gain popularity across the more and try out new strategies. globe—to the benefit of their artists. Starley’s debut single, “Call On I asked Kontor about their favourite Me,” came from our Australian label TOOLS TO Spotify tools and how the platform partner. Spotify played a crucial role has impacted the label’s growth so in making it a hit through platform— far. Here’s what they had to say. EXPAND wide support for the Ryan Riback remix. We did a lot of the groundwork on radio–and video, of course–but THEIR REACH Spotify certainly helped in a new way. AND GAIN POPULARITY ACROSS THE FANS FIRST GLOBE” Fans First is Spotify’s global reward program that celebrates all the devoted super-fans (and there are a lot) across the platform. It provides dedicated listeners with exclusive offers and invites–like a pre-sale and exclusive concert with Foxing or a limited edition vinyl from Father John Misty himself– while supporting additional revenue streams for artists. For artists of all sizes, Fans First offers an amazing opportunity to connect with loyal listeners and give them an opportunity to invest in their favourite artists. It’s a win-win. WINTEL 43

“KONTOR HAS ALWAYS BEEN READY AND WILLING TO EMBRACE NEW CHANNELS AND SERVICES TO PROMOTE AND RELEASE MUSIC. THIS HAS HELPED TO INCREASE BRAND AWARENESS AS WELL AS SECURE MAXIMUM IMPACT FOR OUR MUSIC PROJECTS.”

WHICH OF SPOTIFY’S WHAT ARE SOME OF THE LABEL’S WHAT ROLE DO YOU THINK SPOTIFY DISCOVERY TOOLS HAVE YOU GOALS FOR THE FUTURE? WILL PLAY IN THE SUCCESS OF UTILIZED THE MOST? Continuing to release high quality INDIES GOING FORWARD? Features such as New Music dance and electronic music and Spotify is already essential for Friday (or NMF Cratediggers hopefully have more hits! Kontor independent labels and distributors. in the case of electronic music has always been ready and willing to With regard to our home territory of specifically) can give projects a embrace new channels and services to Germany, the physical and download real boost in the week of release. promote and release music. This has helped to increase brand awareness markets have been quite resilient but, We also focus on new playlists as well as secure maximum impact of course, on a global scale streaming across the full spectrum of dance for our music projects. The two things is leading the way. There will always and electronic music, so we try to be go together. Staying independent is be room for other formats (we even completely up to date with all relevant also important–this enables us to act released a SCOOTER cassette last playlist features and identify where quickly and flexibly. Timing is key, so year) but it is absolutely essential each new play or playlist comes from. we like to be in control of every step to be part of the conversation on in terms of getting our music heard. Spotify, as it’s the shortest route to connecting with fans of our music.

44

KEY STATISTICS PROVIDED BY WINTEL RESEARCH SHOW WHAT AN INDEPENDENT WHAT AN LABEL LOOKS LIKE IN 2017. INDEPENDENT LABEL LOOKED LIKE IN 2017

AMOUNT OF PART-TIME STAFF AMOUNT OF FULL TIME STAFF

3.2 13.6 PART TIME STAFF FULL TIME STAFF

AVERAGE NUMBER OF DEPARTMENTS

2.7 DEPARTMENTS WINTEL 45

ARTIST LOYALTY STAFF LOYALTY 77% OF ARTISTS CHOOSE TO RENEW THEIR CONTRACTS WITH INDEPENDENT LABELS 42% OF STAFF HAVE BEEN THERE SINCE DAY 1

AVERAGE NUMBER OF ARTISTS HOW LONG THE AVERAGE LABEL HAS BEEN IN OPERATION

14.9 YEARS OVERSEAS INDEPENDENT REVENUES

31% OF INDEPENDENT REVENUES COMES FROM OVERSEAS 46

THIS YEAR’S WINTEL SURVEY SHOWED STRONGLY THAT INDEPENDENT LABELS ARE INTERNATIONALISING THEIR BREAKING BORDERS: BUSINESSES, AIDED BY THE GLOBAL REACH OF STREAMING SERVICES AND SOCIAL NETWORKS, AS WELL AS BY THE HARD WORK OF THEIR ARTISTS AND INDIE INTERNATIONAL STAFF IN BUILDING FANBASES BEYOND THEIR HOME COUNTRIES. SUCCESS

WRITTEN BY STUART DREDGE

This year’s WINTEL survey showed “In a way, video streaming was and strongly that independent labels are is the foundation of our success, internationalising their businesses, but audio streaming is only an aided by the global reach of streaming add-on. The irony is that we have services and social networks, as more than 1.5 million monthly well as by the hard work of their listeners on Spotify, but right now, artists and staff in building fanbases if we exploited that potential, we beyond their home countries. would only play into the hands of the major labels who own the bulk of With the average independent now our past catalogue,” says Feustel. getting 31% of their revenues from overseas – and a number getting However, the label has been well over that percentage - WIN focusing on going beyond standard talked to some indies who’ve recordings: for example, by releasing been finding success abroad. performances as Blu-ray discs with multiple bonus videos, as well German classical label Berliner as making recordings available in Philharmoniker Recordings was high-resolution audio formats and founded in 2014 to release recordings beautifully-designed vinyl editions. by the storied orchestra, which already ran its own online-video “Our elaborate ‘coffee table’ CD service, the Digital Concert Hall. editions sell for 39 to 79 Euros and we sell more than 5,000 units of each “Currently, we broadcast about release. Our Beethoven symphony 50 live concerts per season and cycle (69 Euros) sold more than have more than 500 concerts in the 15,000 copies and counting – and archive,” says label manager Felix the orchestra owns the full rights Feustel. The orchestra has also for the future,” says Feustel. worked hard on growing its social media following, which currently “We are aware that the future stands at 1.2 million people. belongs to streaming, but we do not generate relevant income from it. A The label now distributes via an online new orchestra recording can simply shop and to key retailers, while also not be financed with streaming. So using distributors for markets like we are exploring and discussing the South Korea, Japan and the US. issue actively, but it is very difficult to define a strategy,” he says. WINTEL 47

Felix Feustel Label Manager, Berliner Philharmoniker Recordings

“Elaborate physical products, sold Those online campaigns range from “That’s one of the major challenges via the right channels to the devoted Facebook & Instagram advertising for all small or middle companies. fans of the orchestra: that is the and videos to YouTube marketing, One trend is still that a lot of strategy that has worked best for us.” SEO activities and online raffles, music lovers buy CD and vinyl. adds Brandis, noting that ACT That helped our success.” Another label that is finding success has been producing much more through both physical and digital video content for these online For a label like ACT, international means is German jazz label ACT. campaigns in 2018. Both marketing success isn’t just about new platforms, Just for new frontline albums channels are important. but is about expanding the services released so far in 2018, it has it offers to its artists, as they target sold more than 120,000 physical “We still have a lot of ‘physical’ ever-more-global fanbases. “With all editions, 7,000 downloads and customers and they need to find our our experience and knowledge we will done more than 8m streams. new releases in traditional marketing continue to be a sparring partner for channels. Beyond that there are a lot our artists and extend our business to “The strategy is to combine offline of young artists on our roster and of management and concert promoting.” activities like public relations, course established artists looking for advertisements, point-of-sale new audiences, we need to build and South African label Gallo Record marketing, price campaigns with retail develop profiles and strategies on all Company has seen streaming partners and special formats, with important online platforms,” he says. services provide some of its narrow online campaigns designed artists with a way to reach new for specific target groups,” says “Streaming is growing, but for our fans around the world – and help managing director Andreas Brandis. niche it can’t compensate what was them play to larger audiences. lost in physical and download over the last years. Streaming delivers important income, but only for huge catalogues can it create a value which is sufficient to finance a company,” says Brandis. 48

Jeremy Loops released his album Great live shows are a key part of “He just passed 120 million streams Critical As Water this year, for this, of course, but Cowling says in total, and has more than 1.9 example. “Outside of South Africa, that the label has worked hard to million monthly listeners on Spotify,” the album has done 12 million support its artists with the right says founder Magnus Bohman. streams on Spotify and seven kind of marketing. “It’s a digital Supporting this success? “A very million on Apple Music,” says Rob strategy that has heavily focused on strong PR setup. Our distribution Cowling, general manager at the social media, and then moved over did a very good job, and on top of label. “He is South Africa’s most- to YouTube and building a working- that a well-oiled collaboration with streamed male artist in Spotify.” relationship with influencers that then Charlie’s management. We really rolled out into conventional record- Loops is now regularly touring worked well together,” says Bohman. marketing campaigns,” he says. Europe and the US, with Australia “Streaming services like Spotify and Germany proving strong markets “Our main focus has always been helped us a lot. Getting on all of those too. He’s already got one of London’s at home, and the strength of the playlists at the same time Charlie was premier venues, the O2 Academy African catalogue and projected out playing live all over the world plus in Brixton, booked for November continental growth,” adds Cowling. doing PR at the same time. Charlie 2019 – as part of a European tour “We do, however, plan to unlock much has converted many of the playlist playing to nearly 35,000 fans in total. untapped revenue through re-issues listeners into his own fans now.” and archive material worldwide.” And Cowling lists other successes for like many independent labels, Gallo Bohman says that the success the label, from Paxton – who has is flexible in its dealmaking and with so far in 2018 has given Dumont performed in Russia and Sweden, and carve-outs should its artists want to Dumont more confidence to is already eliciting interest from US pursue global opportunities that arise. invest in more artists. talent agencies – to Wonderboom, who won the top award after competing Another label with a healthy against acts from 14 other countries international case study is Dumont at the Silk Road Indie Music Festival Dumont in Sweden, with British in Chengdu, China. Josh Wantie artist Charlie Cunningham. (via a collaboration with French electronic duo FDVM) and veteran act the Parlotones have also been winning new fans abroad in 2018.

Charlie Cunningham British Artist WINTEL 49

A VIEW FROM MARK DOWLING, ABSOLUTE, A LABEL SERVICES COMPANY, ON TODAY’S INDIE HIT MAKERS AND WHAT MAKES A GOOD TODAY’S MUSIC ENTREPRENEURS IN 2018. INDIE HIT MAKERS WRITTEN BY MARK DOWLING

TODAY’S BEST MUSIC ENTREPRENEURS 2. THEY RECOGNISE THEIR LIMITS

SHARE THESE 4 QUALITIES: Much can be achieved by a skeleton staff or an industrious individual, 1. THEY PLAY TO THEIR STRENGTHS however the most successful indie It’s well documented that the hit-makers realise that to meet a major labels simply don’t have the great record’s true potential, they confidence and freedom to take the need a team of experts around them. kind of risks they once did. For young Many artists, managers and smaller upcoming artists and established indie labels are turning to label returning acts alike, more and services not just because the model more, labels want to see a strong works without putting copyrights up finished product before they’re for grabs, but because they are able to willing to draw up a contract. quickly plug into an established team This has meant that A&R duties are of experts in every sector and genre. increasingly being left to others. Through label services, individual And it turns out there are a lot of executives and small operations natural A&R men and women in the are able to quickly enhance their music industry (see Steps panel). workforce with a team that’s made to order depending on the precise needs of their specific campaigns. The best music entrepreneurs recognise that they need help but, most importantly, they need the right kind of help. The skillset and experience that’s needed to put together a successful campaign for a returning heritage act is very different to that of a new artist on the grime scene. They need a business model that allows them to be nimble and flexible. 50

“THE BEST MUSIC ENTREPRENEURS RECOGNISE THAT THEY NEED HELP BUT, MOST IMPORTANTLY, THEY

NEED THE RIGHT KIND OF HELP. ”

MARK DOWLING ABSOLUTE

3. THEY KEEP THEIR With this new micro-business OPERATIONS LEAN approach, keeping costs under control is crucial. Where major The label services model also allows corporations have the luxury of being for control and flexibility when it able to sustain bulging departments comes to overheads—something of pluggers, promo execs, marketers which is crucial for the modern-day and every other auxiliary role a breed of music entrepreneur. Acts now campaign might need all year rely on a multitude of different revenue round, those running a smaller streams and year-round activity rather operation need to work differently. than building everything around an Understanding the importance of album and riding the ebb and flow of building upon their resources when that cycle. And, again, it’s increasingly the time is right and then paring down the artist and the team that sit at again when the added infrastructure the centre, with direct control over is no longer needed is crucial to long every aspect of that business. term financial success. Without that ability to plug into outside expertise on a flexible basis, many indie music entrepreneurs would be financially crippled by structural bulk that is unnecessary most of the time. WINTEL 51

4. THEY ARE REACTIVE That kind of approach is at odds with For example, if you land a spot on AT THE RIGHT TIME the way artist, management and label Graham Norton, you may want to partners like to work. They want to quickly allocate more resource to That adaptability is also critical when start with a realistic target and build TV advertising following the show it comes to campaign strategy itself. a bespoke campaign that is costed to bolster the appearance. If your Because of the corporate structure, appropriately. Then, when things start strategy and spend has been fixed well major label bosses are constantly working and taking off, they want the before the album campaign has even having to satisfy shareholders, flexibility to build upon that initial plan begun, then you may not be able to which often results in inflated sales and add to the budget accordingly. make the most of such opportunities. projections and budgets set in stone at an early date, way before there’s any evidence to suggest how an album will sell in reality. Any experienced music executive will testify how quickly initial predictions usually go out the window… 52

Steps

In common with many of the truly Fascination played a significant A&R independent distributors and labels role in the making of the album, services companies, at Absolute bringing amazing writers on board, as Label Services, we’ve had the well as formulating a plan that would pleasure of working with some of mean that the album was self-funded the most creative, driven and savvy and control stayed with the creators. artist managers and indie label Fascination could have carried executives in the business today. on alone and tried to kick-off the Take Fascination’s Adam Klein and campaign themselves. Thanks to Peter Loraine. Absolute recently the digital revolution, the entire worked with them to help Steps route to market—from promotion to secure a No.2 album with Tears On distribution to retail—can in theory The Dancefloor earlier this year. be coordinated and executed from a It was certainly a successful single laptop. But that’s not what they campaign—one spearheaded did. We were delighted to be able to by management and Steps help by providing all the services to themselves—but the task was ensure a fantastic result for the band. made that much easier by having a great set of songs to work with. WINTEL 53

CHECKLIST FOR A DISTRIBUTION/LABEL SERVICES DEAL:

1. ASSETS BELONG TO… 3. BREAKAGE FROM DSPS 5. ARE DSP TERMS

From artwork to audio to WILL BE DISTRIBUTED NEGOTIATED WITH THE CLIENT metadata, establish who the TO THE CLIENT? AT THE FOREFRONT? assets required for digital Is the contractual position on Are the terms of agreement distribution belong to? If the breakage from digital service between DSPs and distributor decision is made to move providers (where platforms pay or aggregator negotiated with distribution companies, can out a lump sum of money that the artist and label clients’ those assets be easily and cannot be allocated specifically) best interests in mind? affordably transferred, in DDEX clear? If breakage is received, or another standard format? will this be shared with the client, and on what basis?

2. DATA TRANSPARENCY 4. PAYOUTS FROM DSP IPOS WILL Is full data transparency across BE DISTRIBUTED TO THE CLIENT? all services available? Can If a DSP goes public (e.g. clients view and understand Spotify), is the position clear on their full earnings from one how any monies received from platform to the next as close shares will be distributed? to real time as possible?

“ANY EXPERIENCED MUSIC EXECUTIVE WILL TESTIFY HOW QUICKLY INITIAL PREDICTIONS USUALLY GO OUT THE WINDOW…”

MARK DOWLING ABSOLUTE 54

CONCLUSIONS

WRITTEN BY ALISON WENHAM

The third WINTEL report demonstrates There is much to learn from each the increasing power, authority and other, and WIN will be on hand to influence of the independent sector. help, advise, provide and connect, as After twenty years building the sector we have been over the last ten years. from being fragmented and disunited In these markets, even the definition to one of global authority, the creation of an independent changes from one of AIM, IMPALA, A2IM, AIF, Merlin country to the next, but what is clear and WIN are all examples of what is that, definitions aside, there is a can be achieved when we unite. clear, simple and compelling desire to work together and achieve the What we rather patronisingly currently best our artists deserve, and in an label the Rest of the World (ROW) will, environment that is transparent, fair I am confident, become economic and supportive of those principles. powerhouses in their own right in the future, and WIN’s role will be What is also clear is that the work all-important in uniting and building WIN has done in defending and the Trade Associations of the future upholding the value of our rights in those territories. They are, of has been very successful. No course, not new in terms of music, longer is the sector regarded as just new to the western markets an afterthought, it is counted as a and vice versa. With You Tube’s most valuable and significant contributor to popular videos coming from Brazil this the success of the supply chain and year, it is a sure sign of the future. at the heart of diversity and choice for the consumer. As music discovery and global diversification takes the industry further and further away from the controlled environment of hit making and towards consumer driven discovery, our sector will continue to thrive and prosper as it produces the most exciting and diverse music in the world. WINTEL 55

IN ORDER TO MEASURE THE SIZE OF THE GLOBAL INDEPENDENT RECORD LABEL MARKET WE UTILISED TWO KEY TOOLS: METHODOLOGY

WRITTEN BY MARK MULLIGAN

GLOBAL INDEPENDENT This enabled us to utilize invaluable country level insight without revealing LABEL SURVEY: any confidential, company level detail. During 2018 WIN and MIDiA fielded a As an additional step compared to major survey to independent record previous editions, we factored in Artist labels across the globe. The survey Direct (i.e. DIY Artist) revenue. To do this addressed issues including the size we took the Artist Direct revenue that of the business, releases and genres, MIDiA had previously identified and people employed, A&R spend, use of stripped out the portion that may already distributors, details of distributors be tracked by the IFPI via streaming and rates paid to them etc. It also service reports. This was then added to included detailed questions about the independent label revenue as part of label revenue, across all formats, the non-major revenue. Additional in volume and revenue terms. factors that we utilized in the modelling process included, but were not limited to: Questionnaires were distributed to the calculating national market shares of labels by local trade associations and individual labels, identifying what share were returned directly to MIDiA for of sales that were domestic, measuring analysis. The results present unique sales via distributors, analysing picture of the global independent distributor revenue shares and splitting label market and acted as a key this by domestic versus international. input for the market share model. MIDiA additionally leveraged national independent label market data from GLOBAL MARKET SHARE MODEL: local trade associations and other bodies. The first stage of the model entailed All of these inputs were used to create establishing total recorded music market non-major record label market share values (i.e. including major label revenue) figures for each country and additionally by product format at country level using for each product category within each national trade association and IFPI data. country. To ensure that there was no After this, independent label data from double counting of revenue, international the survey was aggregated up to a revenue for each label was only counted country level and fed into the model as overseas revenue and was at a product level by country. appropriately attributed to respective international markets. The resulting interim dataset was then reviewed by a mix of leading independent labels, trade associations and other bodies. 56

MODEL DATA

WRITTEN BY MARK MULLIGAN

Total Recorded Music Revenue ($ Million) Total Recorded Music Revenue Share Total Market Majors Independents Majors Independents US 5,950 3,664 2,286 US 62% 38% Canada 440 332 108 Canada 75% 25% Belgium 122 81 41 Belgium 66% 34% Denmark 138 111 27 Denmark 80% 20% Finland 80 59 21 Finland 74% 26% France 929 637 292 France 69% 31% Germany 1,330 894 436 Germany 67% 33% Italy 249 175 74 Italy 70% 30% Netherlands 271 176 94 Netherlands 65% 35% Norway 139 106 33 Norway 76% 24% Spain 206 175 31 Spain 85% 15% Sweden 200 150 50 Sweden 75% 25% UK 1,315 1,012 303 UK 77% 23% Argentina 131 93 38 Argentina 71% 29% Brazil 298 184 114 Brazil 62% 38% Chile 42 27 15 Chile 65% 35% Australia 415 277 138 Australia 67% 33% Japan 2,754 1,008 1,746 Japan 37% 63% South Korea 501 83 418 South Korea 17% 83% Other markets 1,862 1,199 663 Other markets 64% 36% Global Total 17,372 10,443 6,930 Global Total 60% 39.90% WINTEL 57

Physical Recorded Music Revenue ($ Million) Physical Recorded Music Revenue Share Total Market Majors Independents Majors Independents US 906 627 279 US 69% 31% Canada 91 69 22 Canada 76% 24% Belgium 40 27 13 Belgium 68% 32% Denmark 10 8 1 Denmark 85% 15% Finland 9 7 1 Finland 88% 12% France 339 251 88 France 74% 26% Germany 574 382 192 Germany 67% 33% Italy 96 72 24 Italy 75% 25% Netherlands 60 34 26 Netherlands 57% 43% Norway 13 9 4 Norway 70% 30% Spain 53 46 6 Spain 88% 12% Sweden 20 16 4 Sweden 80% 20% UK 402 315 88 UK 78% 22% Argentina 11 7 4 Argentina 62% 38% Brazil 16 10 6 Brazil 60% 40% Chile 5 3 1 Chile 68% 32% Australia 78 55 23 Australia 70% 30% Japan 2,008 741 1,267 Japan 37% 63% South Korea 186 13 173 South Korea 7% 93% Other markets 331 261 70 Other markets 79% 21% Global Total 5,246 2,953 2,293 Global Total 56% 43.70%

Download Revenue ($ Million) Download Revenue Share Total Market Majors Independents Majors Independents US 944 594 350 US 63% 37% Canada 80 60 20 Canada 75% 25% Belgium 10 7 3 Belgium 67% 33% Denmark 4 3 1 Denmark 83% 17% Finland 1 1 0 Finland 76% 24% France 40 26 15 France 64% 36% Germany 114 81 33 Germany 71% 29% Italy 16 11 5 Italy 69% 31% Netherlands 8 5 3 Netherlands 64% 36% Norway 3 0 3 Norway 9% 91% Spain 7 5 1 Spain 80% 20% Sweden 3 2 1 Sweden 77% 23% UK 146 113 33 UK 77% 23% Argentina 1 1 0 Argentina 63% 37% Brazil 5 3 2 Brazil 65% 35% Chile 1 0 1 Chile 35% 65% Australia 75 51 25 Australia 67% 33% Japan 278 101 176 Japan 37% 63% South Korea 9 1 7 South Korea 14% 86% Other markets 110 67 43 Other markets 61% 39% Global Total 1,854 1,131 722 Global Total 61% 39.00% 58

Streaming Revenue ($ Million) Streaming Revenue Share Total Market Majors Independents Majors Independents US 3,372 1,888 1,484 US 56% 44% Canada 201 145 55 Canada 72% 28% Belgium 34 21 13 Belgium 62% 38% Denmark 73 57 16 Denmark 78% 22% Finland 42 27 15 Finland 64% 36% France 270 154 116 France 57% 43% Germany 355 243 112 Germany 68% 32% Italy 74 51 23 Italy 69% 31% Netherlands 127 85 41 Netherlands 67% 33% Norway 95 80 15 Norway 85% 15% Spain 92 74 17 Spain 81% 19% Sweden 141 104 37 Sweden 74% 26% UK 501 382 119 UK 76% 24% Argentina 39 24 15 Argentina 61% 39% Brazil 163 94 69 Brazil 58% 42% Chile 22 14 8 Chile 62% 38% Australia 205 129 75 Australia 63% 37% Japan 265 83 182 Japan 31% 69% South Korea 282 33 249 South Korea 12% 88% Other markets 1,009 610 399 Other markets 60% 40% Global Total 7,361 4,301 3,061 Global Total 58% 41.60%

Total Digital Revenue ($ Million) Total Digital Revenue Share Total Market Majors Independents Majors Independents US 4,451 2,557 1,894 US 57% 43% Canada 285 208 76 Canada 73% 27% Belgium 45 28 17 Belgium 63% 37% Denmark 77 60 17 Denmark 78% 22% Finland 43 28 15 Finland 65% 35% France 318 185 133 France 58% 42% Germany 472 327 146 Germany 69% 31% Italy 90 62 28 Italy 69% 31% Netherlands 135 91 44 Netherlands 67% 33% Norway 98 75 23 Norway 77% 23% Spain 101 82 19 Spain 81% 19% Sweden 144 107 38 Sweden 74% 26% UK 652 499 153 UK 77% 23% Argentina 41 25 16 Argentina 61% 39% Brazil 179 104 75 Brazil 58% 42% Chile 24 16 8 Chile 65% 35% Australia 283 208 75 Australia 73% 27% Japan 574 198 376 Japan 35% 65% South Korea 294 35 259 South Korea 12% 88% Other markets 1,118 655 462 Other markets 59% 41% Global Total 9,424 5,549 3,876 Global Total 59% 41% WINTEL 59 60