thereport ISSUE 387 | 13 APRIL 2016 Contents 08 Beyond Music – Bot to trot 09 Pinboard: Stats, deals, startups and more 11 Country profile: Thailand

Global recorded music revenues grow in 2015 Back from the dead 2

ISSUE 387 13.04.16 COVER FEATURE irst, the good news. Last year saw digital revenues overtake physical sales for the first time, with the Global recorded music revenues grow in 2015 overall growth driven by an uptick Fin streaming subscriptions. The IFPI’s report hailed 2015 as “the industry’s first significant year-on-year growth in nearly two decades”. Now the bad news. The body and its major-label members are training their fire on a “value gap” between the amount of free, ad-supported, on-demand streams on services like YouTube and the money those streams generate for the industry. “3.2% sounds very good, but you’ve got to remember that we’ve had almost two decades of decline,” said IFPI boss Frances Moore at the IFPI’s press briefing in London yesterday (12th April). “During that two decades of decline, we’ve slumped by something like 35%. Music consumption is exploding worldwide, and it’s a 3.2% increase. The question could be: why is it not higher?” There is a complex tension here that the record industry is trying to navigate. On the one hand, it wants to celebrate growth but, on the other hand, it knows that the value gap is something that is going to take a long time to tilt in its favour. We have spoken to the digital heads at all three majors as well as Spotify’s director of economics to ask them what can be Back from the dead done to grow the market further and how realistic it is to get YouTube and others to Since 2000, the record industry has (almost) got used to having its nose bloodied each time the IFPI annual evaporate this value gap. figures roll round. Decline, doom, gloom. The odd year of miniscule growth was never a trigger for brazen Michael Nash, EVP of digital strategy, Universal Music Group, is confident the optimism, but last year something incredible happened – the market grew by 3.2%. It hasn’t undone almost industry can get to “hundreds of millions of two decades of pain, but it’s enough to get labels feeling bullish. Subscription streaming was the hero of the paying subscribers” as opposed to the tens

report year but the villain behind a massive value gap between paid and free went unnamed – yet everyone knew of millions currently. it was YouTube. Last year was all about the war on free. In 2016, can the war on the value gap be won? Stu Bergen, CEO, international & global commercial services at Warner Music the 3

ISSUE 387 13.04.16 COVER FEATURE

20bn 17.9 GLOBAL RECORDED MUSIC INDUSTRY REVENUES 2005–2015 (US$ billions)

16.2 Physical Digital Performance rights Synchronisation 15bn 14.0

11.8

10.3 10bn 8.9 8.1 7.5 6.7 6.7 6.1 6.1 5.8 5.5 5.8 4.9 4.1 4.3 5bn 3.7 2.9 2.1 1.8 2.0 2.1 1.1 1.3 1.3 1.4 1.4 1.6 1.0 1.0 1.2 0.3 0.3 0.3 0.3 0.3 0.4 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Group, is also bullish there is more growth IT’S STREAMING WOT WON IT EDGAR BERGER, chairman and CEO of international, Sony Music Entertainment to come. “I don’t think we have reached As with recent figures from the RIAA in the the saturation point – or anywhere near it,” US, the IFPI’s report hails streaming as the Can the market for subs grow much Rdio folded at the end of last year. Will he argues, but says that “awareness is the driving force behind the industry’s growth, further in 2016? we see more closures this year as biggest challenge – more than price point”. with it more than making up for the decline I cannot comment on any of our Apple and Spotify soak up most of Building on this, Edgar Berger, chairman in both physical and download sales. That’s partners directly, but we are excited the new subscribers? and CEO of international at Sony Music proper multi-tasking. to see companies like Apple entering There is no dramatic change Entertainment, says the focus this year has Streaming revenues grew 45.2% in the streaming market and that certainly [compared] to previous years. When to be on how the industry can “re-educate 2015 to a value of $2.9bn – “the industry’s helps grow the market overall. industries grow up, there is a shake out. a generation that has got used to not fastest-growing revenue source,” in the Over the years, that is just happening; but paying”. IFPI’s words, although sceptics will point Apple is aggressively promoting the family it’s just the normal course of business in any Finally, Will Page, director of economics, out that given that the other sources are package subscription. That pushes up the industry. Spotify, says that the real markets to look physical and download sales, this field of volume of users but lowers the ARPU. Is that a at to understand what is happening here growing (recorded) revenue sources is a long-term worry? Has YouTube Red got a proper chance in the are Canada, Mexico and New Zealand – field of one. The question is about what we do to re- market and can it fix these value gap criticisms countries that had long been presumed to (Yes, you can split vinyl out from the educate a generation that has got used to not the IFPI spent a lot of its report bemoaning? be in freefall but totally bucked the trends overall ‘physical’ figure to provide another; paying. As part of that, of course, streaming All I am saying is that we welcome any paid last year. The streaming effect, in his mind, but, much as we love that trend, it’s still a services are offering family plans. All of them subscription service that has a viable economic has long passed being just a Scandinavian niche in the grand scheme of things.) [not just Apple Music] do. There is always a model. I am not going to comment beyond

report or Northern European phenomenon. The message from the IFPI and its balancing act between being inclusive and not that on any of our partners because that’s not Before that, here are the key themes and labels is positive on streaming, however. driving down the overall value too much. the purpose of the report. talking points that emerged from the report. “The music industry has successfully the 4

ISSUE 387 subscribers in 2015. We did, however, to slide. Digital now accounts for 45% of 13.04.16 COVER FEATURE GLOBAL REVENUES BY pose this question to all three major industry revenues, overtaking physical SEGMENT 2015 (US$ billions) representatives after the event (see boxes). sales for the first time. Indeed, this was emerged from digital disruption, and the Left unaddressed, too, was the question a tipping point foreshadowed in financial future is bright,” said Berger at the report’s 14% of whether or not there will be a ceiling results from labels like Universal and launch. on this growth in $£€9.99-a-month on- Warner published earlier in the year. “The three biggest markets in the world 2% demand subscription streamers (although Yet the flipside to streaming’s growth – the US, Japan and the UK – are up. And we did raise this in the Q&As). In 2015, is the continued decline of the CD and so are Asia, Europe, North America and Spotify and Apple Music’s competition downloads market, which may spur Latin America – the latter by 11.8%. Around spurred sharp growth, but how long can thoughts of a ticking clock for music the world, seven countries are showing 45% that continue? ownership. double-digit growth. And the main driver is 39% There are hopes for new rivals like That’s not how the IFPI sees it: it noted streaming.” SoundCloud Go and YouTube Red – despite that two of the world’s biggest music Physical Digital That emphasis on the global recovery the other issues around their free tiers – as markets – Japan and Germany – still get came through clearly. “One of the most Performance rights well as Pandora’s global expansion plans, 75% and 60% of their respective music striking features of our industry’s recovery and the potential for growth from Deezer, sales from CDs. But these increasingly look is its global nature,” added Bergen. Synchronisation Rhapsody and other players in the market. like anomalies. “The largest growth came in markets as Even so, labels know they cannot afford The physical market was down 4.5% last diverse as China, Argentina and Sweden. to rest on their laurels and celebrate the year, but this was termed “a slower rate Technology and digital deal making have just 8m in 2010. It’s a good growth curve, 27m new subscribers from 2015: if that than in previous years” by the IFPI (8.5% in opened markets previously rife with piracy but there are caveats. growth stalls in 2016, they will have some 2014 and 10.6% in 2013). Take your pick of as well as emerging economies like Russia, First, the lion’s share of streaming serious thinking to do about how the whether this is a sign that things are going China and Brazil.” subscription growth is coming from just market evolves. to start bottoming out soon or more proof Yet if we follow things back to 2001, we two services. Apple Music launched in June that there’s not much left to crumble off can see that the glory days are not quite 2015 and reached around 10m subscribers OWNERSHIP CONTINUES the block. within touching distance. 2001 was a year by the end of 2015 – a significant TO CRUMBLE Meanwhile, the downloads market fell that was down 5.1% in value terms and achievement from a standing start. Spotify by 10.5% in 2015 to a value of $3bn, a bigger down 6.8% in unit terms (the IFPI has long had 15m in January 2015 and 28m by the Subscription-based access may be doing slump than the 8.2% decline in 2014. Music since stopped reporting in unit terms); even end of the year. well, but paid-for ownership continues Ally never will predict that the market will so the market was worth $33.6bn. That’s 23m net subscriber additions To spell it out in harsh terms, the between the two, in an overall market that STU BERGEN, CEO, international & global commercial services, Warner Music Group market last year was under half of what added 27m net new subscribers to the 41m it was in 2001. It might be showing signs it ended 2014 with. Can the growth in subs continue at the We are always open to of recovery, but it has a huge amount of (Note, this doesn’t mean only 4m new current price point? experimentation and calibrating trauma to undo before anyone can say subscribers among all the other streaming I think it’s quite sustainable as it’s an services and pricing, but I don’t with confidence that we are out of the services: the disappearance of services incredible value proposition to have think we have reached the woods. including Muve Music and Rdio means the world’s music at your fingertips saturation point – or anywhere near there’s a bigger non-Spotify/Apple pool of for a modest price a month. Awareness it – as far as the existing services in ARE WE NOW FACING DOWN A new subscribers within these figures.) is the biggest challenge – more than price the market [are concerned]. Will more point. If you look at Sweden and Norway, services hit the wall? I think it’s unclear STREAMING DUOPOLY? Labels batted back Music Ally’s question during the press event about whether you have fairly high penetration rate [of at this point what path it will take. We are subscribers]. We are a long way from there in encouraged by healthy competition and

report The IFPI estimates that there are now 68m they are worried about the dominance people paying for a music subscription of just two (out of more than 400 legal the US and the UK, for example. new entrants into the market. service, up from 41m at the end of 2014, and digital services worldwide) in adding new the 5 WILL PAGE, director of economics, Spotify

ISSUE 387 The numbers are up for the first time trumped downloads and downloads 13.04.16 COVER FEATURE since 2012 and it’s the highest uptick are now the minor format. in growth since 1998. The absolute The countries to really draw value figures are pretty much attention to are Mexico and New MUSIC’S DIGITAL SHARE COMPARED TO OTHER SECTORS 2015 exactly what was reported last year Zealand [NZ saw its first year [$15bn], however. of growth in 15 years in 2015]. It 60 [Music Ally approached the IFPI to is phenomenal for us there. Both 60% clarify this. It said, “Every year we report the countries are growing at a rate of around 15% 50 year-on-trend in constant currency terms. is US dollar terms. Neither of those countries This means re-stating all previous years so are Scandinavian or even European [the 40 45% that we can show a consistent like-for-like countries traditionally held up as booming comparison. The effect of this is that the re- due to streaming]. 30 stated revenues for 2014 are US$14.5bn.”] The other country that was interesting In the recent past, when you have seen last year was Canada and exchange rates 20 growth it’s been by 0.2% or 0.5%. You’ve not shouldn’t be an issue there as Canada is 21% 20% seen growth like this since the 1990s. pegged to the US dollar. Spotify only got 10 7% If you revisit the figures and rip out Japan, in there in November 2014. There was 8% 4% which is a useful exercise, you can see the growth in Canada last year and we know 0 industry is 50% digital and 32% physical. that there was decline in Canada long before Within that, streaming is 44% of digital we launched. So, for a market that was in GAMES MUSIC FILMS BOOKS MAGAZINES NEWSPAPERS and downloads are 43%, so streaming has trouble, [that growth] is reassuring.

be 100% access-based, but the emphasis for purpose in 2016 and is exploited by Moore added, “We’ve got services like pressure on it to introduce a subscription is certainly tilting in that direction and companies who take advantage of them to the YouTubes or the SoundClouds or the tier. away from ownership – even in markets make music available for free. others who are shoehorning themselves At the end of March this year, it did just where the latter is still the biggest chunk of YouTube is the company everyone into those safe harbours, saying that they that with the debut of SoundCloud Go, revenues. talks about, even if the IFPI and other – companies making available music – are initially in the US, after signing deals with rightsholder bodies are keen to be seen entitled to use those safe harbours.” all the majors and Merlin for the indies. THE VALUE GAP IS THE as talking about the ad-supported, on- The report quantifies this, with a A lot can happen in a year. But if the IFPI’S NEWEST AND demand category as a whole rather than diagram comparing annual revenues per industry thinks those unnamed companies it BIGGEST TARGET… one company. user for Spotify and YouTube which they accuses of causing the value gap are going Here’s how the IFPI’s report quantifies hope will spell things out in stark terms. to roll over and pay significantly higher You already know this from recent the value gap: it claims that 68m streaming “Our figures show that something like royalties by this time next year, they should pronouncements by the RIAA, BPI and subscribers contributed $2bn in revenues 80% of people going to YouTube are looking be prepared for a lengthy and often public other industry bodies: this year’s not-so- last year – an average revenue per user for music, yet on page 24 of our report scrap - which may not always go their way’. pantomime villain for the music industry is (ARPU) of $29.41. But that 900m users of you can see that the estimated [annual] the “value gap” between free, ad-supported free, ad-supported services generated just revenue per user from Spotify is $18, and … BUT YOUTUBE REFUSES TO streams and the revenues they generate $634m – an ARPU of $0.70. Yes, seventy from YouTube it’s $1,” said Moore. “80% of BE PAINTED AS THE VILLAIN for labels. cents. people going to YouTube are looking for Well, it’s the symptom of the real villain “The single biggest source of online music, and we are seeing a return from YouTube wasn’t present at the IFPI event,

report in their eyes: outdated legislation around music is generating only 4% of our revenue,” YouTube of a dollar per user per year.” but the company has been getting its “safe harbours” on the internet as well said Berger at the event. “This is a gigantic 2015 began with Universal and Sony defence out in recent weeks. Here was no as the fact the DMCA is seen as unfit mismatch between volume and rewards.” calling out SoundCloud and putting exception, with YouTube’s spokesperson the 6

ISSUE 387 13.04.16 COVER FEATURE STREAMING’S GROWTH SUBSCRIPTION AND AD-SUPPORTED YEAR ON YEAR 2011–15 notice-and-takedown process on YouTube REVENUES VERSUS USERS 2015 sending Music Ally a statement – they can remove any or all user-uploads 2011 2012 2013 2014 2015 immediately after the IFPI event. 60 of their works from the platform on an 2bn $2bn “To date, Google has paid out over $3bn automated and ongoing basis. Indeed, Subscription 46.7% to the music industry – and that number is 45.2% since January 2014, over 98% of all YouTube 50 Ad-supported growing significantly year on year,” said the 56.0% 37.5% copyright removal claims have come 1.5bn spokesperson. “Only about 20% of people 40 through Content ID. Although business are historically willing to pay for music.” partners can be expected to disagree from 40.9% They added, “YouTube is helping artists 30 time to time about the price of a license, 1.0bn and labels monetise the remaining 80% any claim that the DMCA safe harbours are 900m that were not previously monetised. The 20 responsible for a ‘value gap’ for music on global advertising market is worth $200bn. YouTube is simply false.” $634m 500m This is a tremendous opportunity.” 10 Without getting too he-said she-said Google’s recent filing to the US about all this, the argument here will be 68m Copyright Office tackles the value-grab 0 around how labels can use Content ID if 0 question head-on, too – and is being sent they DON’T agree licensing terms with USERS REVENUES USERS REVENUES out to journalists covering the issue. YouTube: the company says that they “Some in the recording industry have can choose to be ‘partners’ instead and suggested that the safe harbours somehow companies [with deal terms] and say, ‘The make full use of Content ID. This point in “As technological change advances, we see diminish the value of sound recordings, music’s up there, it’s a take it or leave particular requires further debate. new business opportunities in everything pointing to YouTube and blaming the DMCA it deal’ […] The music companies are from mobile messaging to virtual reality,” for creating a so-called ‘value grab’,” asserts between a rock and a hard place,” said IT’S NOT ALL RUNNING said Nash. that filing. “This claim is not supported Moore. BATTLES Meanwhile, Nash warned that there by the facts. As an initial matter, it is needs to be a “nuanced view of the important to understand that YouTube has YOUTUBE, AGAIN, HAS To end on a positive note, there were some marketplace” including the interplay had licence agreements in place with both GOT ITS RETORT IN EARLY olive branches held out in the IFPI’s event, between different services. “Consumers major and independent record labels for with labels keen to stress that they want tend to consume from multiple services. many years; it is simply incorrect to say “Those pressing the ‘value grab’ argument positive relationships with the technology They don’t just consume from one service that YouTube relies on the DMCA instead of also assert that the royalty rates in these industry, not just the opportunity to that happens to be free and one that licensing works.” licences are too low, allegedly because squeeze the pips of the streaming firms happens to be paid,” he said. This is true, although the labels and the DMCA’s notice-and-takedown process even more if legislation changes go their Those $18-a-year Spotify users and other rightsholders aren’t disputing the fact makes it too difficult for record labels to way. $1-a-year YouTube users aren’t two that YouTube has licensing deals; topically, withdraw their works from YouTube in the “Our future depends on harmonious entirely-separate groups: they’re a Venn those deals are up for renewal this year, face of users re-uploading those works. convergence of media and technology. We diagram. A welcome note of caution in with YouTube already in a rolling monthly This claim, however, ignores Content need the partnership of tech companies. what’s becoming an increasingly heated deal with Universal Music after its existing ID, which has been in existence since They must be fairly rewarded if we expect (again – it flares up every few years around agreement expired. 2008 and which record labels (and many them to continue to bring innovation and licensing-renewal time) debate. The label argument is that YouTube is other copyright owners) use every day to creativity to music,” said Michael Nash, For now, we can say this at least: the able to use its safe harbour protection to monetise their works on YouTube,” claimed EVP of digital strategy at Universal Music recorded-music market is growing; there

report impose “distorted” licensing terms on the the Google filing. Group. are lots of positive signs; and the “value music rightsholders. “Thanks to Content ID, record labels He praised Spotify, Apple Music and gap” argument is going to run and run “They are able to go to the record do not have to rely solely on the DMCA’s SoundCloud, while looking further ahead. this year. :) the 7

ISSUE 387 13.04.16 COVER FEATURE

MICHAEL NASH, EVP of digital strategy, Universal Music Group

Can the growth in subscription continue Prime and we will the model. We are going available. at the $£€9.99 a month price point? see how it evolves its for the flexibility to work We want to be Or will it hit saturation point soon? position. SoundCloud to put different things in in a position to When we go from tens of millions to has just refined its business front of different consumers do more things hundreds of millions of paying subscribers, position and we are partners with them at different times to drive on a more artist- you are going to see a variety of discovery but also specific basis different models. Maybe we will see to maximise the and do what we have always models evolve around premium radio value of that consumer. We want done really well which is, within the label – that is being discussed a lot. Maybe to have data that enables us to marketing departments, to partner with different models that are more device- understand the interaction of artists and management to figure out the centric. I think you are going to see the consumers with our content on right formulations. market evolve. these platforms so that we can We are at the early stage of adjust the models over time. Can you recalibrate the DMCA and tighten adoption for subscription. We tend We are really looking for broad up on safe harbour? Or will it be a disastrous to think of this world as very well partnerships. Fundamentally re-run of PIPA and SOPA? established, but the reality is that this the right economics are at the At an industry body level, we are in a better mass migration of the consumer to core of that equation, but there position to talk about that kind of thing. the cloud is just under way. It’s being are other elements, too; it is Personally I always believe that the right driven by fundamental technological really important to us to have a ideas, when properly advocated, have an change and we are going to be in a world monetising the consumer. There are a degree of control over the distribution of our opportunity to influence public policy, so pretty soon of 5bn smartphones. We don’t number of services right now that are content to be able to work the relationship we are going to continue to articulate the think there are going to be 5bn $£€9.99 a competing. There’s Google and YouTube from between free and paid. It’s not so simple as views we think best reflect the interests of month subscribers, but we think there the standpoint of going after the streaming to say it’s a war on free or that it’s just about our artists. are going to be hundreds of millions of music consumer. There is a much more the value gap. We are always looking at everything we $£€9.99 subscribers and then people dynamic landscape than saying that we used We want to get paid for our content, can learn from as we evolve the business. consuming content backed by a bunch of to be in a monopoly [with iTunes] and now but we also want to work to develop In general, what we are looking to do is very different models. we are in a duopoly. the marketplace by being more actively pro-consumer. And I also think if we look It is too early to say we are anywhere involved in programming across tiers and at the artist community engagement in the near approaching saturation point. But do A year ago, the big theme was the war on doing different things for different artists conversation now, lots of artists in the US we need to have diversity in our approach free where SoundCloud was held up as a at different times. Obviously there’s no have been articulating their views; so it is to the consumers and to put different offers symbol of the problem; but, a year later, it reason for us to make the entire catalogue of becoming a more nuanced conversation. in place in the market? Absolutely. We will has a licensed subscription service. This year, heritage artists like The Beatles, The Rolling At the end of the day we are continue to want to experiment to support it’s a war on the value gap. It’s not going to Stones or The Who available for free in front looking for a good outcome for the new models. be fixed in a year, is it? of the paywall. By the same token, we may marketplace, which includes consumers Getting properly compensated for our want to [do that] with new artists that don’t and technology companies and artists. Does an Apple Music/Spotify artists’ work in the free streaming world is [yet] have any audience at all and [that It’s not so black and white that we are duopoly worry you? a significant point of concern. With respect could involve] being very aggressive about looking to establish something that is going

report We are in a marketplace right now where to all our partnerships, what we are going how we want to partner with a platform like to be an issue for consumers at the level Amazon has a competitive position around for is the right price for our content under SoundCloud to make interesting content that you are describing. the 8

ISSUE 387 13.04.16 BEYOND MUSIC Bot to trot Chatbots are myriad in 2016 – and have plenty of music potential

he next time a wild-eyed tech Now Facebook has made its chatbots move... 900m+ that will build you a Spotify playlist of similar evangelist tells you chatbots are the Messenger users will now be able to interact with bots music to whichever artist name you tweet at future of everything, tell them to look created by brands and businesses... it. This is less ‘chat’ than a simple command- up GooglyMinotaur on the internet. Or response interaction, mind. atT least get the nearest bot to do it for them. Bots are hot in 2016. Messaging apps Facebook Messenger service. The 900m+ There is a lot of froth and hype around GooglyMinotaur launched in June including Telegram, Kik, Slack and Line have Messenger users will now be able to interact chatbots right now, including people hailing 2001 and was an instant-messaging bot already introduced artificial-intelligence (AI) with bots created by brands and businesses. them as “the new apps” or the “post-app developed for Capitol Records by a startup agents to interact with their hundreds of For now, this is more focused on customer internet”. Suggesting that they’re just another called ActiveBuddy and used in a marketing millions of human users, but the big guns of service and commerce. “You’ll never have to interesting new interface into existing campaign for Radiohead. the tech world are also getting involved. call 1-800-Flowers again,” as Mark Zuckerberg services – much like voice control – doesn’t It lived on AOL’s desktop instant- Microsoft recently launched a platform put it during his keynote at Facebook’s f8 sound quite as impressive. messaging service, AIM, and fans could ping for developers to create chatbots, although conference this week. Even as the latter, chatbots have plenty it to get information, links to downloads one of its demonstrations of the technology Media is part of the picture too, though: of potential for music services and music and other content around the release of – a chatty Twitter bot named Tay – showed CNN’s Messenger bot will learn from its marketers alike: whether it’s modern-day Radiohead’s Amnesiac album. the potential downsides when mischievous interactions with each user over time, so it equivalents of Radiohead’s GooglyMinotaur Despite being added to the ‘buddy lists’ internet users quickly taught it how to can recommend news stories that they might – if Snoop Dogg doesn’t have one by the

report of nearly 400,000 fans, GooglyMinotaur was become a ribald, racist, Holocaust denier. like. Vine’s Kik chatbot will serve up a video in summer we’ll be surprised – or new ways shut down in March 2002. Perhaps 14 years Now Facebook has made its chatbots move response to a keyword. Meanwhile on Twitter to get recommendations on or from a on, it’s time for it to be revived. as part of its new Messenger Platform for its there’s already DJ Lazy Set, styled as a bot streaming service. :) the 9

ISSUE 387 13.04.16 TOOLS Pinboard » Deals Tweets

vKONTAKTE TUNECORE #Facebook Russian social network Independent digital vKontakte has signed an distributor TuneCore @sammyandrews agreement with Warner has launched in Facebook are Music Group to offer Germany. It is now the latter’s music legally active in the US, potentially through the service. The Japan, Canada, the about to be the out-of-court agreement US and Australia. worlds biggest terms are confidential. content streaming service #FacebookVSGoogle *(hopes they’ll pay creators fairly!) TICKETMASTER BANDCAMP Bandcamp has @chuckdafonk Ticketmaster is planning to announced that it Chatbots? partner with Facebook to has paid out $150m to CRAPBOTS allow users to buy tickets artists since it launched directly through the social in 2008 and now has network. It is expected to go over 1m users. In March live by the end of April. 2016, it paid out $4.3m @alexhern alone. Anyway Facebook is the only tech firm I find actively 7DIGITAL VIVENDI/FNAC scary but that might just be because it’s most poised to kill my career and industry

7digital has completed its acquisition of French digital streaming music provider Snowite. The company’s Vivendi, Universal Music Group’s parent company, has clients in France include major retail chains and brands. acquired a 15% stake in French retail chain Fnac – with a purchase price of €159m. Follow Music Ally report on Twitter... twitter.com/musically the 10

ISSUE 387 » Stats 13.04.16 TOOLS Pinboard ITALY’S RECORDED MUSIC MARKET 2015 Source: FIMI (April 2016)

NEW SERVICE BRAPP €148m €27m +63% Market total – 2015 Subscription streaming Increase from 2014

€122m €14m +38% Market total – 2014 Ad-supported streaming Increase from 2014 21% €19m –5% Increase 2014–15 Downloads Decrease from 2014

BY FORMAT (value) €6m +38% Digital Digital increase from 2014 CD +17% Vinyl €82m €60m Combined physical increase from 2014

What is it? MOST POPULAR GENRES AUSTRALIA’S RECORDED Source: ARIA Source: Nielsen Music Brapp. BRAPP BRAPP BRAPP! There has arguably (April 2016) IN THE US – 2015 (April 2016) MUSIC MARKET – 2015 been no more perfectly named startup than Brapp OVERALL 50m in recent times. The aim of this UK-based app is to 5% 4% Rock R&B/hip-hop €27m €27m capture some of the raw excitement in the rap field; 10% 3% it does this by getting producers to upload beats Pop Country Total value +5% from 2014 Digital value +10.6% from 2014 7% and rappers to rhyme over them – and then share 19% Latin EDM the results with its community. €46m €23m Christian/ Others 22% 30% gospel (Seasonal 2% Subscription streaming Subscription streaming It soft-launched in September 2015, and has Jazz 2% value – 2015 value – 2014 generated more than 10k one-minute clips since Classical 2% then, with Roni Size among the producers trying Children 1%) €24.8m 10.8m€8.8m it out. We know apps like this can be popular: CDs/VINYL Ad-supported7.7m streaming Ad-supported streaming look at Smule for several examples of that. The 2%2% Rock R&B/hip-hop 4% value – 2015 value – 2014 question now is what the business model is behind 13% 3% Pop Country 100m a community of rappers and producers centred 6% €70.8m 10.8m €85.2m 16% Latin EDM 7.7m on a social app. Brands? Pro features for serious Digital track value – 2015 Digital track value – 2014 musicians? In-app purchases of fun audio/video Christian/ Others 17% 37% gospel €61.7m €67m report effects? Or a Smule-style subscription for access (Jazz 2% 10.8m Classical 2% 7.7m to all its features? There’s potential, but first Brapp Seasonal Digital album value – 2015 Digital album value – 2014 needs to build that thriving audience. Children 2%) the 11

ISSUE 387 13.04.16 MARKET PROFILE Thailand

physical market down approximately 10-15% and the digital market flat. THAILAND That all makes for some pretty depressing reading. But the Thai music industry is, in fact, in a relatively upbeat mood as 2016 winds STATS into gear, with a recent report on Thai news f website The Nation claiming that 2015 has Population 67.7m been “a truly golden year” for the industry. The reason: the rise of social media and

d especially YouTube. “We became far more GDP per capita $16,100 actively involved in social media in 2015 than h in previous years because we recognised that channels such as Facebook, Instagram, Internet users 22.1m YouTube, iTunes Music Store, KKBox and c Line Music help fans communicate easily Broadband households 5.4m and closely with our artists,” Wichian “Nick” Rerkpaisan, EVP of music production and

i promotion for Genie Records (part of Thai Mobile subscriptions 97.1m entertainment giant GMM Grammy), told Thailand’s popularity as a tourist destination is so great – Active smartphones 32.7m The Nation. (It’s worth noting, incidentally, that GMM the country was tenth in the world tourism rankings in 2013 – Grammy’s music arm recorded a 14.4% rise in Sources: IFPI/CIA World Factbook that foreigners tend to see it as a pretty familiar place. revenue in 2015, to $92.7m, although this was apparently due to a “reorganisation”, rather hat’s no bad thing, of course. But the the country’s digital music prospects. year-on-year – slipping from $34.1m in 2013 to than a stellar performance.) global music industry should be wary It is perhaps no surprise that as recently $27.4m in 2014. Notable YouTube successes in 2015 of drawing easy conclusions about as 2012, mobile personalisation accounted Overall, the Thai recorded music market included Getsunova’s ‘Klai Khae Nai Khue Thailand. For a start, the country’s for more than half of Thailand’s digital music nosedived by 21.7% in 2014, its fifth successive Klai’ becoming the first Thai song to pass digitalT infrastructure has historically been revenues. Even in 2014, mobile personalisation year of decline. Industry expectations are 100m views on the platform (it has since weak. Thailand had only 22.1m internet users brought in $6.5m, more than the revenue that this decline continued into 2015, with the doubled that), with the band’s ‘Yoo Trong and 5.4m broadband households in 2015 from downloads ($5.8m) and ad-supported Nee Nan Kwa Nee’ and ‘Kham Tham Sueng according to IFPI figures, which is low for a streaming ($4.7m). Rai Khon Tob’ also passing the Getsunova country of 67.7m people. Meanwhile, 4G is Subscription streaming is on the rise, same milestone. That may just entering the market, with the second 4G albeit moderately, with revenue up from sound like relatively small fry to spectrum auction taking place in December $8.9m in 2013 to $9.3m in 2014, as is ad- a global music industry that 2015. supported streaming. But, for the moment, has grown accustomed Indeed, a recent TelecomAsia report these modest increases are nowhere near to YouTube views in the

report claimed that Advanced Info Service (AIS), enough to compensate for plunging revenue hundreds of millions. But it’s the country’s biggest telco, has some 11m 2G from mobile personalisation and downloads, an encouraging start for a customers; that’s hardly an inspiring figure for with digital income as a whole falling sharply market that, most observers the ISSUE 358

12 DTAC / Deezer ISSUE 387 13.04.16 MARKET PROFILE Thailand continued... Line

RECORDED MUSIC SALES DIGITAL MUSIC REVENUE (Volume, million units) (In US$) Source: IFPI

5m 30m

4m 25m

20m 3m 15m 2m 10m 1m 5m

0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 CDs Other physical Single-track downloads Subscription streams Full album downloads Ad-supported streams Mobile personalisation

agree, has been slow to catch on to the Chiyasak says that 2015 may well have after its launch in November thanks to its possibilities of digital music. been a “golden year” for Thai music lovers cheaper subscription fee. Deezer, which has a Piset Chiyasak, director of Thai recorded and indie labels. But the same could not partnership with telco DTAC, and Line Music, music group TECA, says that streaming necessarily be said for the larger labels. which launched last year in Thailand, are said services like YouTube and Apple Music (which “It depends on who you stand for,” says to be of lesser importance. arrived in Thailand as part of its global launch Chiyasak, who stresses he is speaking from a Overall, Chiyasak is confident about the last year), are starting to make a significant personal viewpoint. future of digital music in Thailand thanks impact in the country, leading consumers “If you are a user, yes, there is lots of to a more stable political environment away from downloading and mobile music to choose to listen to. It is great. And (following the political crises of 2013-14), the personalisation. if you are an indie, it is a good opportunity to government’s digital economy policy and “It is just like a new toy being given to a introduce yourself with a lower cost to huge improvements in digital infrastructure. kid – they love it and thus throw away the old new generation audiences on the internet. “With the penetration of mobile phones one,” he says. “Also, the internet infrastructure But if you are an established music label, you [97.1m of them in the country] outnumbering With the penetration of mobile of 3G is fully implemented and we are might think YouTube’s deal is not a fair one. It the population of Thai people, there is transforming to 4G; this makes a connection phones outnumbering the is what we call a value gap, allowing users to no doubt that the internet infrastructure steadier and faster.” population of Thai people, there upload illegal content at the beginning.” has improved in the last year,” Chiyasak Thailand, then, is undergoing the same is no doubt that the internet As well as YouTube, Chiyasak says that concludes. “And, with 4G being auctioned in painful digital transition from downloading to the largest digital music services in Thailand December last year, it is anticipated that the infrastructure has improved in

report streaming that we have seen in most global are Apple Music and iTunes, which launched internet will surely contribute a vital part and music markets. And, as in many markets, the the last year” in June 2012, with Jook from Chinese ISP a key success in both the Thai economy and process has raised many questions. Piset Chiyasak, TECA Tencent, “coming to rival those old faces,” the digital economy.” :) the 13 Music Ally is a music business information and strategy company. We focus on the change taking place in the Music Ally is an ISSUE 387 industry and provide information and insight into every aspect of the business, consumer research analysing 13.04.16 example of perceptive the changing behaviour and trends in the industry, consultancy services to companies ranging from blue journalism at its chip retailers and telecoms companies to start-ups; and training around methods to digitally market your best, with unrivalled artists and maximise the effectiveness of digital campaigns. We also work with a number of high profile music Andrew Fisher, events around the world, from Bogota to Berlin and Brighton, bringing the industry together to have a good CEO, Shazam coverage of the commonsense debate and get some consensus on how to move forward. Entertainment digital music sector”

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