10 years ago Warner Music’s top 5 superstars generated 15% of their revenue. Today, this figure is down to just 5%.

MBW’s Stat Of The Week is a series where we spotlight one data point that deserves the attention of the global music industry. Stat Of the Week is supported by Cinq Music Group, a technology-driven publishing, distribution and rights management company.

One of the most dramatic effects streaming has had on the record industry has been the democratization of listening.

The logic goes like this: In the past before Spotify, consumers would have to make a specific decision about the next album they wanted to buy. That buying decision for business was narrow and largely guided by media and broadcasters—the proverbial “gatekeepers”—who were limited in the number of artists they could recommend to the big unwashed.

These days, no business decision is required. No consumer needs to “wrap” their money on an untested new album – they just need to upload it to Spotify/YouTube Music/Apple Music, etc., click play, and see if they’re interested.

If they like it, they can keep listening. If they don’t, they can simply skate off to another auditory pleasure.

Year after year, this phenomenon is significantly diluting the concentration of total music listening claimed by a handful of the world’s biggest superstars.

As a result, each year, an increasing share of total streams is moving away from the Top 10 biggest hits and towards a much broader group of “middle class” artists with significant, but not necessarily explosive, fan bases. .

MBW has released this statistic several times this year, but it bears repeating: According to our Luminate numbers calculations, the top 10 audio streaming acts in the US are H1 2022 were accumulated games over 1 billion times less than they were wearing H1 2019 (2.74 billion versus 3.81 billion).

The impact of streaming on live trading

This phenomenon is not exclusive to the record industry.

In an upcoming interview Worldwide music business Yearbook 2022/2023Jay Marciano, CEO and Chairman of AEG Presents, points out that the democratization of listening to streaming services has had a significant impact on his company’s “bars and theaters” business – ie. venues that typically hold hundreds, rather than thousands, of ticket holders.

“A club that would do 100 shows a year in 2012 is now doing 180 shows a year,” says Marciano. “This is a direct result of there being more talent [with a viable fanbase] free It’s a great byproduct of the benefits of streaming.”

“A club that would do 100 shows a year in 2012 is now doing 180 shows a year.”

Jay Marciano, AEG presenter

He adds: “What’s new is the frequency at which the fans are going [these] shows: A quoted statistic, years ago, was that the average concertgoer attends 1 level-something show per year.

“In our experience, in clubs and theaters [today]where the audience is primarily 22 to 32, it’s more like eight times a year.”

Warner Music Group

Warner’s ‘portfolio’ strategy

All this, in turn, has influenced the A&R strategy of major music companies.

You may recall that in September, outgoing Warner Music Group CEO Steve Cooper noted that — thanks to streaming — his company had moved toward a “portfolio” A&R strategy.

“What we have done in recent years is to reduce our size [financial] dependent on superstars. Reducing that dependency has allowed us to continue to strengthen our approach to A&R, which is long-term artist development.”

Steve Cooper, who spoke in September

This strategy, Cooper explained, meant that WMG was now spreading its A&R budget among a wider range of artists, thus reducing the company’s financial “dependency on superstars”.

Or to put it another way: Warner is investing a smaller portion of its growing A&R budget each year in a select handful of global stars and betting a larger percentage of that budget on artists who haven’t yet cracked the top 5 on the Billboard Hot 100.

Big new data point to play with

On Tuesday (Nov. 22), speaking on Warner Music Group’s third-quarter earnings call, Cooper gave us a landmark statistic that reflected the business reality of the above trends.

Cooper said: “A decade ago, our top 5 artists generated over 15% of our recorded music revenue, physical and digital. In 2022, they made up just over 5%.”

To walk you through that again: the top 5 best-selling artists at one of the major record labels, as a subset, have seen their cumulative share of that major label’s revenue drop by two-thirds over the past 10 years.

Where have these two thirds gone? We’ll get back to that – because it’s slightly more nuanced than “they all disappeared into the ‘middle class’ of artists that MBW keeps harping on about”.

“A decade ago, our top five artists generated more than 15% of our recorded music and digital revenue. In 2022, they made up just over 5%.”

Steve Cooper, speaking this week

For now, let’s keep our eyes on the prize, sift through some SEC filings and do the numbers.

According to Warner Music Group’s annual financial reports, WMG’s recorded music revenues totaled physical and digital revenues (i.e., CD, vinyl, download and streaming royalties combined) of $3.868 billion in FY2022 (12 months to the end of September this year).

A decade earlier, in FY2012 (12 months to the end of September 2012), the corresponding figure for WMG was 1,830 billion dollars.

(A moment, please, to marvel at the fact that under Steve Cooper’s leadership, that number is more than doubled after 10 years at WMG… and back to the math.)

Below you can see how the projected percentages Steve Cooper presented this week – RE: Warner’s Top 5 Annual Artists in FY2022 and FY2012 – look like in (i) real monetary terms and (ii) in pie chart form. [Click on the chart to view numbers.]

The key?

According to MBW’s calculations of Steve Cooper’s figures, Warner Music Group’s top 5 musicians of 2012 are likely to have gathered a larger amount annual digital and physical royalties (≈$274.5 million) but is equivalent to WMG’s Top 5 artists formed in 2022 (≈$193.4 million).

It’s not just a recession share of income; there is a recession real income generated.

Remember, this represents a ten-year period when WMG’s total recording earnings more than doubled ($1.83 billion in 2012 vs. $3.87 billion in 2022).

“broadened and deepened” Warner’s artist roster

Steve Cooper took the time Tuesday to explain some of the reasons behind the decline in revenue share for Warner’s Top 5 artists over the past decade.

He pointed out that in addition to losing share to the “middle class” of artists – as described above – today’s group of all the biggest superstars is also waiting in the battle for share of listening with (i) artists from many more countries than ever before, and (ii) artists from many different eras.

Point (ii) was compiled this year by Warner Music-distributed Running up the hill by Kate Bush, which was officially the world’s most popular hit on Spotify this summer after appearing on Netflix Stranger Things.

Point (i) is summed up when looking at the selection of Premier League stars from different parts of the world who have signed with Warner labels in recent years – incl. Anita (Brazil), who was recently nominated for a Grammy Award for Best New Artist in 2023, as well Nose size (Nigeria), Twice (South Korea), oath Paulo London (Argentina).

“Ten years ago we were an Anglocentric company. Today, we are a truly global music entertainment company.”

Steve Cooper, WMG

In fact, just this week, Warner announced an international deal with Dalia Mubarak, described by WMG as one of the “most influential female superstars in the Middle East.”

Steve Cooper said on Tuesday’s earnings call: “As we’ve broadened and deepened our artist roster and prioritized a global approach to local music, our revenue mix has evolved… We’ve also proven once again that music can come from anywhere and resonate . everywhere. We develop not only blockbusters in England, but also superstars within their own country.”

Cooper added: “Ten years ago we were an Anglocentric company. Today, we are a truly global music entertainment company operating in over 70 countries.”

Cing Music Group’s repertoire has won Grammy Awards, dozens of gold and platinum RIAA certifications, and numerous No. 1 hits on various Billboard charts. Its repertoire includes heavyweights such as Bad Bunny, Janet Jackson, Daddy Yankee, TI, Sean Kingston, Anuel and hundreds more.Worldwide music business

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