WEBVTT - The Key Changes Rocking the Music Industry in 2025 0:00:07.160 --> 0:00:10.119 Welcome to Strictly Business, the podcast in which we speak 0:00:10.160 --> 0:00:12.320 with some of the brightest minds working in the media 0:00:12.360 --> 0:00:17.599 business today. I'm Andrew Wallenstein, chief Media Analysts that Illuminate Intelligence, 0:00:18.000 --> 0:00:22.800 the subscription market research service formerly known as Variety Intelligence Platform. 0:00:23.160 --> 0:00:26.280 We just announced our rebrand in tandem with the release 0:00:26.320 --> 0:00:29.680 of our latest special report all about the state of 0:00:29.680 --> 0:00:32.920 the music industry, and I am fortunate to have the 0:00:33.080 --> 0:00:38.760 reports author Rob Steiner to give us a download on streaming, publishing, 0:00:38.800 --> 0:00:43.400 the concert business, and of course AI. So Rob, thanks 0:00:43.400 --> 0:00:44.040 for joining us. 0:00:44.280 --> 0:00:45.519 Hi, thank you for having me. 0:00:46.280 --> 0:00:49.280 All right. So, you know, I think there was a 0:00:49.400 --> 0:00:52.280 sense for a long time that the explosion of audio 0:00:52.360 --> 0:00:55.360 streaming had the music industry in a growth mode for 0:00:55.400 --> 0:00:58.480 a while now, but it seems like a more complicated 0:00:58.520 --> 0:01:02.680 picture is emerging crossed the various revenue streams you are 0:01:02.720 --> 0:01:05.200 tracking this report, so tell us about that. 0:01:05.959 --> 0:01:11.120 Yeah, So overall, it is certainly interesting because the music industry, 0:01:11.840 --> 0:01:14.360 at least when we're talking about the top level, like 0:01:14.480 --> 0:01:18.679 the major labels, the big companies, the major artists, it's 0:01:18.720 --> 0:01:23.199 in a really good spot, a record breaking spot. In fact, 0:01:24.560 --> 0:01:28.840 it basically ever since the pandemic, that sort of supercharged 0:01:28.920 --> 0:01:31.440 the growth that was happening with the rise of streaming, 0:01:31.480 --> 0:01:34.520 you know, that started taking off around the mid twenty tens, 0:01:34.560 --> 0:01:37.560 and then the pandemic hit and that just launched that 0:01:37.920 --> 0:01:42.160 revenue stream into the stratosphere. Same thing with live music. 0:01:42.200 --> 0:01:44.800 All of a sudden, this post pandemic concert demand just 0:01:44.959 --> 0:01:48.200 sent a spike in ticket sales and revenues, and that 0:01:48.320 --> 0:01:53.240 was all great, But now twenty twenty four is basically 0:01:53.240 --> 0:01:58.200 across the board signaling a slowdown. We are seeing single 0:01:58.240 --> 0:02:01.440 digit percentage growth between twenty twenty three and twenty twenty 0:02:01.480 --> 0:02:07.160 four for revenue growth and streaming in particular, and that's 0:02:07.240 --> 0:02:09.920 in due part in part due to the fact that 0:02:10.000 --> 0:02:12.760 it is sort of reaching critical mass and paid usership 0:02:12.840 --> 0:02:16.880 in develop markets like the US. Live music is also 0:02:16.960 --> 0:02:20.640 seeing a slow down in attendance, and there are it 0:02:20.680 --> 0:02:23.640 is increasingly relying more on increased ticket prices more than 0:02:23.639 --> 0:02:28.240 anything else to keep revenue growing. And then by extension too, 0:02:28.320 --> 0:02:31.320 as streaming slows down, slisoda is publishing. And then that's 0:02:31.320 --> 0:02:33.680 also not to mention the threat that AI poses to 0:02:33.720 --> 0:02:38.440 publishing in particular. So with all of this said, basically 0:02:39.200 --> 0:02:44.320 I saw the industry at an inflection point where if 0:02:44.320 --> 0:02:47.800 they continue on their current path, it won't be bad necessarily, 0:02:48.480 --> 0:02:51.800 but it probably means that it will be of, you know, 0:02:51.840 --> 0:02:54.320 the next few years of flatlining in terms of growth, 0:02:54.680 --> 0:02:56.880 which obviously a lot of these companies don't want they 0:02:56.880 --> 0:02:58.200 want to continue growing. 0:02:58.520 --> 0:03:01.440 So there's a lot there. Let's go kind of one 0:03:01.480 --> 0:03:04.880 piece at a time, starting with streaming, which seems to 0:03:04.919 --> 0:03:07.040 be sort of at the center of all of this. 0:03:09.680 --> 0:03:13.120 It sounds like from what you're saying that this is 0:03:13.160 --> 0:03:19.640 a case of market saturation mature development markets. Perhaps they've 0:03:19.800 --> 0:03:22.880 taken up all the Spotify and Apple Music and YouTube 0:03:23.240 --> 0:03:26.760 that they're going to get. So what do we do now? 0:03:26.880 --> 0:03:28.560 Is it just a matter of all, right, well, there's 0:03:28.560 --> 0:03:31.240 plenty of emerging market runway to go, or do we 0:03:31.280 --> 0:03:34.359 need to get more creative in these mature markets. 0:03:34.920 --> 0:03:38.960 Yeah, it's a little bit of both, where on one hand, 0:03:39.400 --> 0:03:42.800 the market or the industry powers that be are now 0:03:42.880 --> 0:03:49.000 looking towards emerging markets for streaming, especially in Latin America 0:03:49.160 --> 0:03:52.320 and Asia and the Middle East in particular, those are 0:03:52.400 --> 0:03:55.720 now pretty much responsible for like the major sources of 0:03:55.760 --> 0:03:59.760 growth in the streaming industry because you know, the likes 0:03:59.800 --> 0:04:02.280 of Spotify, Apple Music. They're still breaking into a lot 0:04:02.280 --> 0:04:06.520 of these markets. So we are going to see the streamers, 0:04:06.600 --> 0:04:10.280 the labels, et cetera, pushing hard into that. The Big 0:04:10.320 --> 0:04:13.960 three of all established a presence throughout Latin America, Middle 0:04:14.000 --> 0:04:17.800 East and so on, and then back home here there 0:04:17.839 --> 0:04:20.880 is sort of a debate going on where basically the 0:04:20.920 --> 0:04:25.560 Big three are really advocating for price increases for the DSPs. 0:04:26.200 --> 0:04:30.200 They believe that ten ninety nine a month is simply 0:04:30.320 --> 0:04:33.840 to loaf a price for all the music in the world, 0:04:34.480 --> 0:04:39.320 and to a degree they are right. When Spotify was created, 0:04:39.839 --> 0:04:43.800 it did in a sense solve the industry's biggest issue 0:04:43.839 --> 0:04:47.440 around digital piracy, whereas, how do we get people to 0:04:48.440 --> 0:04:52.480 pay for access to all the music in the world online. 0:04:52.520 --> 0:04:56.200 Spotify found a really you know, streamlined solution where they 0:04:56.720 --> 0:05:01.000 kind of simplified the experience of act accessing this music 0:05:01.040 --> 0:05:04.000 online and put it behind a pay wall. People are 0:05:04.040 --> 0:05:07.440 willing to pay for it, and they still are, but 0:05:07.600 --> 0:05:10.880 now it seems like as usership is sort of reaching 0:05:10.880 --> 0:05:15.800 critical mass, there's now a sense that like basically the 0:05:15.839 --> 0:05:18.440 Big Three sort of leading this charge, this idea that 0:05:19.000 --> 0:05:22.919 music had lost a lot of value in the Internet age. 0:05:23.279 --> 0:05:28.200 You know, post Napster, post the Internet, and frankly, as 0:05:28.240 --> 0:05:32.359 the report gets into the argument can be made that 0:05:32.440 --> 0:05:35.400 music never really recovered the value it lost, you know, 0:05:35.480 --> 0:05:38.560 the golden age of the nineties and the CD boom, 0:05:38.839 --> 0:05:41.800 that when you adjust for inflation, at least in the US, 0:05:42.960 --> 0:05:47.479 revenue hasn't reached those levels. The peak was nineteen ninety 0:05:47.560 --> 0:05:49.240 nine when Napster was founded. 0:05:50.520 --> 0:05:52.840 And so I wonder, and I think about I make 0:05:52.880 --> 0:05:56.480 the comparison to the video business, where you know, clearly 0:05:56.600 --> 0:05:59.960 we see the netflixes of the world have built themselves 0:06:00.160 --> 0:06:03.720 is a tremendous business. The other players in the market, 0:06:03.800 --> 0:06:06.400 they'll they'll be okay, they're actually starting to turn profit 0:06:06.480 --> 0:06:09.360 after a rough period. But I think there's also an 0:06:09.360 --> 0:06:15.200 acknowledgment that the peak era pre streaming of cable television 0:06:15.560 --> 0:06:19.320 just much better margins and much better business. And so 0:06:19.800 --> 0:06:22.440 is the music business diluting themselves, that they could sort 0:06:22.440 --> 0:06:26.320 of put the monetization toothpaste back in the tube here. 0:06:27.839 --> 0:06:31.120 It's hard to say. I mean, it does seem like 0:06:32.240 --> 0:06:36.400 that the at least the Big three. Their argument is 0:06:36.400 --> 0:06:41.400 that people will be willing to pay for you know, 0:06:41.600 --> 0:06:46.839 higher streaming subscription prices. On one hand, because we you know, 0:06:46.960 --> 0:06:49.760 the s VODs of the world and netflixes of the world, 0:06:50.120 --> 0:06:53.080 they've increased their prices several times over in just the 0:06:53.120 --> 0:06:56.400 past few years, and Spotify and the DSPs have but 0:06:56.520 --> 0:07:00.240 only like only recently, only within the past two years. 0:07:00.320 --> 0:07:04.400 They've shown they've shown much more patients. And so I 0:07:04.520 --> 0:07:07.680 just wonder whether it's going to be a mistake that 0:07:07.720 --> 0:07:10.320 they're making to push up the prices with the same 0:07:10.360 --> 0:07:14.040 sort of aggressiveness as the netflixes of the world, unless 0:07:14.640 --> 0:07:17.400 they're putting more value into these DSPs, which you know, 0:07:17.480 --> 0:07:21.320 I think of my own Spotisfy subscription and it's not 0:07:21.400 --> 0:07:24.920 just about music for me, it's podcast it's audio books. Yeah, 0:07:24.960 --> 0:07:27.760 and so maybe they're not crazy to push these prices. 0:07:28.360 --> 0:07:32.080 Yeah. No, especially with Spotify in particular, they have really 0:07:32.800 --> 0:07:35.440 in just the past couple of years have started pushing 0:07:36.680 --> 0:07:38.960 essentially transferring to platform to being a lot more than 0:07:39.000 --> 0:07:41.760 a music streamer. They wanted to be a multimedia location. 0:07:42.520 --> 0:07:46.320 You know, they have audio books, which has created you know, 0:07:46.400 --> 0:07:50.040 a whole whole litany of issues in terms of music 0:07:50.120 --> 0:07:54.320 royalty payments that we could get into. They have pushed 0:07:54.320 --> 0:07:58.320 hard into video podcasting, but then on the music side 0:07:59.000 --> 0:08:02.680 they are also pushed for. Basically, like the hot button 0:08:03.800 --> 0:08:06.880 concept that has really dominated the industry is leading into 0:08:06.880 --> 0:08:10.320 super fans for a lot of the for a lot 0:08:10.320 --> 0:08:12.760 of the Big three, and a lot of these major companies. 0:08:12.440 --> 0:08:15.320 Explain fans, Yeah, yeah. 0:08:14.840 --> 0:08:18.880 It's basically it is the best way to describe it, 0:08:18.920 --> 0:08:21.400 or at least the official way that Illuminate describes it 0:08:21.440 --> 0:08:25.120 based on a survey data. Are people that engage in 0:08:25.280 --> 0:08:28.760 I believe at least five or more music related activities, 0:08:29.200 --> 0:08:32.200 so going to a concert, buying merch list in music, 0:08:32.240 --> 0:08:36.600 buying music, et cetera on a pretty regular basis. And 0:08:36.920 --> 0:08:40.360 this group is small, I believe it's about twenty percent 0:08:40.679 --> 0:08:45.560 of the US music listeners according to Illuminate, but their 0:08:45.600 --> 0:08:50.720 buying power is substantial. There is again with our data, 0:08:51.160 --> 0:08:53.880 we have found evidence of that. We've also seen it 0:08:53.920 --> 0:08:59.160 in practice give great results for particularly companies based in Asia. 0:08:59.800 --> 0:09:04.199 Hype Corporation is probably the biggest success story. They essentially 0:09:04.320 --> 0:09:09.960 launched a super fan app Weavers basically think like a 0:09:10.000 --> 0:09:14.079 social media platform but for like paid private fan clubs 0:09:14.120 --> 0:09:17.400 for like BTS and a lot of the K pop artists. 0:09:17.440 --> 0:09:21.880 But now it's expanded to like Ariana Grande and du Alipa. 0:09:21.960 --> 0:09:25.400 They have been able to generate a substantial amount of 0:09:25.480 --> 0:09:28.679 revenue and usership. They have gone up consistently pretty much 0:09:28.679 --> 0:09:31.800 every quarter for the past couple of years. Same thing 0:09:31.800 --> 0:09:36.280 with ten Cent in China. Their fan club revenue again 0:09:36.320 --> 0:09:41.680 based from like, you know, a super fan subscription streaming tier, 0:09:41.840 --> 0:09:44.400 you know, where for an extra couple bunts a month, 0:09:44.440 --> 0:09:48.439 a couple bucks a month over the standard streaming subscription, 0:09:48.600 --> 0:09:53.040 you get exclusive content or access to you know, early 0:09:53.080 --> 0:09:55.720 access to concert tickets or merch you know, just some 0:09:55.800 --> 0:10:00.360 sort of perk to incentivize the most dedicated who basic like. 0:10:00.400 --> 0:10:04.120 The idea is that like these people are so passionate 0:10:04.120 --> 0:10:06.640 about the artists they like that if given the opportunity 0:10:06.720 --> 0:10:09.920 to support these artists, they will more likely than not 0:10:10.040 --> 0:10:13.120 take it. And the industry is really banking on this 0:10:13.200 --> 0:10:18.720 particular group because they think they haven't been fully utilized yet. 0:10:19.320 --> 0:10:23.640 And I guess we'll see in time how effectively they 0:10:25.600 --> 0:10:30.120 use that super fan segment to the best of the business. 0:10:30.160 --> 0:10:33.040 And so I want to turn though to how the 0:10:33.120 --> 0:10:36.120 slow down that you've described at the top relates to 0:10:36.880 --> 0:10:39.840 the increasing headlines we're seeing around the label business. The 0:10:39.880 --> 0:10:43.319 big three, particularly with regard to how the majors and 0:10:43.360 --> 0:10:46.480 the indies are having some friction. 0:10:46.920 --> 0:10:51.160 Yeah, yeah, it's this particular. This month in particular has 0:10:51.200 --> 0:10:54.880 seen a lot of friction on the label front currently, 0:10:55.040 --> 0:10:59.240 probably the biggest, the biggest headline right now is the 0:11:00.080 --> 0:11:06.760 back and forth around the UMG Downtown Music acquisition. Basically, 0:11:06.840 --> 0:11:10.440 for context, UMG is I believe the biggest of the 0:11:10.440 --> 0:11:14.560 Big three. They are looking to acquire Downtown Music Holdings, 0:11:14.600 --> 0:11:18.120 which is home to a lot of vital services for 0:11:18.320 --> 0:11:22.160 the indie music sector, both from like the individual DIY 0:11:22.280 --> 0:11:27.520 artist label level too, you know, larger but still independent 0:11:27.679 --> 0:11:33.280 labels and publishers and stuff. That's sort of really been 0:11:33.360 --> 0:11:36.720 emblematic of the growing tension between those two worlds. And 0:11:36.760 --> 0:11:41.880 granted there's always been animosity between the indies and the majors, 0:11:42.280 --> 0:11:44.720 but it does seem like it is sort of being 0:11:45.800 --> 0:11:50.439 aggravated recently due to the streaming slowing down, you know, 0:11:50.520 --> 0:11:54.600 that core issue has basically led to the majors and 0:11:54.640 --> 0:11:57.240 the leading companies in the in the music industry to 0:11:57.360 --> 0:12:01.200 look for other ways to essentially dive versufy their income. 0:12:02.080 --> 0:12:06.319 And also with the rise of streaming, in part due 0:12:06.360 --> 0:12:08.679 to the rise of streaming, the indie market has actually 0:12:08.760 --> 0:12:12.320 been really able to flourish as streaming is established in 0:12:12.360 --> 0:12:19.199 these developing markets. Basically, it creates a more access to music, 0:12:19.240 --> 0:12:22.200 which then in turn creates a larger ecosystem for these 0:12:22.240 --> 0:12:27.760 independent publishers, distributors, labels to then operate on a global level. 0:12:28.600 --> 0:12:32.400 In terms of this streaming slow down to some degree, 0:12:32.440 --> 0:12:35.720 I'm surprised given the headlines I'm seeing about the flood 0:12:35.800 --> 0:12:40.520 of AI generated music hitting consumers ears these days, how 0:12:41.600 --> 0:12:44.680 big is the potential for this to compound the challenges 0:12:44.720 --> 0:12:46.280 the industry is already facing. 0:12:49.080 --> 0:12:53.120 Well, Yeah, to put it bluntly, it's a pretty significant one. 0:12:53.920 --> 0:12:57.600 And it's not just from the headlines we've been seeing 0:12:58.280 --> 0:13:02.160 from you know, like these fake bands or artists getting 0:13:02.280 --> 0:13:08.079 thousands of listeners on Spotify and thousands of monthly, monthly followers. 0:13:08.320 --> 0:13:12.120 That is certainly an issue, but it's also from like 0:13:13.200 --> 0:13:17.880 the lesser known corners of the industry, where you know, 0:13:18.000 --> 0:13:21.520 I have several friends who are full time freelance producers. 0:13:21.880 --> 0:13:25.480 Their day job is creating background music for TV shows. 0:13:26.040 --> 0:13:30.200 You know, the young and the restless needs an ambient 0:13:30.320 --> 0:13:33.720 track for a coffee shop, they can whip up a song, 0:13:34.080 --> 0:13:36.880 send it over. You know, they work with the music supervisor. 0:13:37.880 --> 0:13:41.840 Now with AI, that music supervisor can say go to 0:13:41.920 --> 0:13:47.520 Suno and just request give me a soft acoustic song 0:13:47.640 --> 0:13:51.880 for a coffee shop and then there you go. So 0:13:52.240 --> 0:13:55.959 basically it is coming from multiple corners. It can affect 0:13:56.000 --> 0:14:00.000 the front facing artists that are having careers as artist, 0:14:00.559 --> 0:14:03.920 but then it also will greatly impact working musicians as well, 0:14:04.679 --> 0:14:09.200 like those who create background music or are songwriters or 0:14:09.280 --> 0:14:11.800 just session musicians. All of that is at risk here. 0:14:12.840 --> 0:14:15.319 In fact, one of the reports that I cite in 0:14:16.000 --> 0:14:21.120 the special report basically found that the industry is set 0:14:21.160 --> 0:14:24.680 to lose about four billion dollars from AI over the 0:14:24.720 --> 0:14:28.240 next several years. So it is significant. 0:14:28.600 --> 0:14:32.960 And do consumers who are facing this flood of music, 0:14:33.680 --> 0:14:36.200 how are they taking to this? Are they making the 0:14:36.280 --> 0:14:38.680 distinction with human artists? Are they just fine with it? 0:14:39.400 --> 0:14:41.080 Yeah, it does seem like it is kind of a 0:14:41.160 --> 0:14:45.200 mixed bag. I think early on there was sort of 0:14:45.200 --> 0:14:49.320 a novelty to it for a while AI music. I think, 0:14:49.360 --> 0:14:53.280 in at least the AI music that people were interacting 0:14:53.320 --> 0:14:57.000 with in like a positive way, where like songs where 0:14:57.040 --> 0:15:01.520 they took a major artist's voice and had them sing 0:15:01.560 --> 0:15:04.960 another major artist song, or there was that fake song 0:15:05.080 --> 0:15:07.560 by the Weekend in Drake a year or two ago 0:15:07.640 --> 0:15:12.280 that gained a lot of traction. Now I think it's 0:15:13.080 --> 0:15:16.520 I think just as the general public is more skeptical 0:15:16.560 --> 0:15:22.000 of AI overall, that is also I think applied to 0:15:22.360 --> 0:15:25.120 their view on AI music to a certain extent. I mean, 0:15:25.160 --> 0:15:28.640 I can tell you again, based on like survey data, 0:15:28.640 --> 0:15:34.000 I found that actually, like specifically asked musicians and industry 0:15:34.000 --> 0:15:37.720 people and songwriters who work in the industry, like what 0:15:37.800 --> 0:15:45.600 they thought is overwhelmingly skeptical negative for obvious reasons, And 0:15:46.160 --> 0:15:48.800 it does seem like that skepticism is also applying to 0:15:48.960 --> 0:15:51.800 these artists too, where you know, a lot of there's 0:15:51.800 --> 0:15:55.400 been a lot of pushback to these to the news 0:15:55.440 --> 0:16:01.560 of AR artists dominating dominating Spotify that in now people 0:16:01.560 --> 0:16:04.040 are like worried that that is a thing they have 0:16:04.120 --> 0:16:07.960 to potentially worry about of these DSPs putting this AI 0:16:08.040 --> 0:16:12.200 generated music onto their you know, discovery playlist without them knowing. 0:16:12.240 --> 0:16:16.200 And then there's sort of a skepticism that arises around that, like, 0:16:16.920 --> 0:16:18.960 you know, am I listening to an AI song? How 0:16:19.000 --> 0:16:22.360 can I tell? Should the DSP disclose this, so it 0:16:22.400 --> 0:16:25.000 does you know, as with everything around AI, it raises 0:16:25.000 --> 0:16:26.400 a lot of questions and answers. 0:16:26.800 --> 0:16:29.520 Yeah, it sounds like we're in the very early stages 0:16:29.560 --> 0:16:32.280 of something that's going to be a pretty sticky wicket 0:16:32.320 --> 0:16:35.640 for the industry. So let's turn to a bright spot. 0:16:35.760 --> 0:16:38.960 The publishing side of the business seems to be booming. 0:16:39.040 --> 0:16:42.280 What's what's going on to explain the increase in royalties. 0:16:43.040 --> 0:16:48.240 Yeah, so publishing has always sort of been an anchor 0:16:48.400 --> 0:16:51.400 of the music industry. You know, what we're talking about 0:16:51.400 --> 0:16:56.880 here is essentially like licensing for TV shows, for radio, 0:16:57.560 --> 0:17:01.640 for streaming especially, and that you know, unsurprisingly has been 0:17:02.120 --> 0:17:06.520 the biggest point of growth is amongst digital royalties. And 0:17:07.440 --> 0:17:10.200 the simple answer is that with the rise of streaming, 0:17:10.320 --> 0:17:16.159 publishing really flourish as a result. But you know, there 0:17:16.160 --> 0:17:20.560 are some pretty some pretty important caveats to make there 0:17:20.760 --> 0:17:25.040 where One part of it is also just like as 0:17:25.280 --> 0:17:28.840 music has become easier than ever for the average person 0:17:28.920 --> 0:17:32.760 to just upload to streaming services, that obviously has also 0:17:32.800 --> 0:17:37.280 contributed to it. But at the same time, it is 0:17:37.600 --> 0:17:43.159 disproportionately the majority of the royalties being generated are really 0:17:43.160 --> 0:17:45.679 only going to like the top of the heap, you know, 0:17:45.840 --> 0:17:49.320 like the Superstars, the Taylor Swifts of the world, as 0:17:49.359 --> 0:17:53.840 well as like the major labels. So in reality, you 0:17:53.880 --> 0:17:55.920 look at these numbers and you might think, oh, it's 0:17:56.080 --> 0:17:58.560 better than ever to be a working musician, but the 0:17:58.800 --> 0:18:01.640 you know, it's a lot more comp located to that, unfortunately, 0:18:02.119 --> 0:18:05.920 in part because the royalties generated by these streaming services 0:18:05.960 --> 0:18:09.600 are literally fraction of a fraction of pennies. And then 0:18:10.320 --> 0:18:13.280 add to the threat of AI as I was talking 0:18:13.280 --> 0:18:16.760 about before, and also add to the fact that certain 0:18:16.840 --> 0:18:20.040 DSPs like Spotify and Amazon as a result of adding 0:18:21.119 --> 0:18:23.720 you know, extra features that we were talking about earlier, 0:18:23.840 --> 0:18:27.760 namely audiobooks that basically allowed them to utilize a legally 0:18:27.920 --> 0:18:33.200 loophole where basically, now that they can classify their subscriptions 0:18:33.240 --> 0:18:37.160 as bundles, they essentially get to pay a lower payout 0:18:37.240 --> 0:18:42.920 rate to music artists and songwriters. So there are threats 0:18:43.000 --> 0:18:46.760 for sure at the door here, but at least for now, 0:18:46.840 --> 0:18:50.600 like this is probably the one of the few corners 0:18:50.640 --> 0:18:53.040 of the industry that is still growing more than just 0:18:53.160 --> 0:18:54.480 single digit percentages. 0:18:54.600 --> 0:18:59.040 So and what in your report does it say about 0:18:59.080 --> 0:19:02.040 the state of the catalog market in twenty twenty five 0:19:02.080 --> 0:19:05.960 which had been just cruising along at a pretty feverish 0:19:06.040 --> 0:19:07.600 clip for the past few years. 0:19:08.200 --> 0:19:12.360 Yeah. Yeah, the catalog business is interesting because I do 0:19:12.400 --> 0:19:15.920 feel like if we were having this conversation six years ago, 0:19:16.119 --> 0:19:19.800 the vast majority of people wouldn't know what the music 0:19:19.840 --> 0:19:23.520 catalog business even is. But like around twenty twenty two, 0:19:23.560 --> 0:19:27.400 we started seeing all of a sudden explosion of headline 0:19:27.440 --> 0:19:31.560 grabbing deals, you know, both for the artists involved and 0:19:31.640 --> 0:19:34.479 also the price tags they were fetching. You know, like 0:19:34.720 --> 0:19:38.800 Bob Dylan, Bruce Springsteen, Justin Bieber even, they were all 0:19:38.840 --> 0:19:42.360 fetching you know, one hundred million plus for their catalogs. 0:19:43.040 --> 0:19:46.280 So I would say that that sort of gold rush 0:19:46.400 --> 0:19:50.400 is definitely dissipated. But it's not like the market has 0:19:50.440 --> 0:19:52.760 come down to earth either. We are still seeing some 0:19:52.920 --> 0:19:57.840 like pretty massive deals come out of this space, chief 0:19:57.880 --> 0:20:00.679 among them being the first billion dollar deal for a 0:20:00.760 --> 0:20:05.720 single artist catalog, which was between Sony and Queen last year. 0:20:08.080 --> 0:20:11.840 So that one is interesting because again, as a result 0:20:11.880 --> 0:20:16.280 of these companies looking for ways to diversify their income, 0:20:16.880 --> 0:20:19.760 this is sort of like it's all catalogs have always 0:20:19.760 --> 0:20:24.080 been a surefire way, especially for legendary artists. Because oftentimes 0:20:24.080 --> 0:20:26.040 one of the key ingredients you get with them are name, 0:20:26.080 --> 0:20:29.360 image likeness rights. So if you have that plus publishing, 0:20:29.400 --> 0:20:32.000 plus masters, even if you only have one or two 0:20:32.040 --> 0:20:35.919 of the of that combination, you can utilize that to 0:20:36.040 --> 0:20:40.200 basically create a brand. You know, think of like how 0:20:40.840 --> 0:20:43.760 Bob Dylan sold his catalog a few years ago and 0:20:43.800 --> 0:20:48.040 we just got an Oscar nominated Bob Dylan biopic. You know, 0:20:48.119 --> 0:20:51.119 that adds value to the Bob Dylan catalog at the 0:20:51.200 --> 0:20:52.520 end of the day. And they were able to do 0:20:52.560 --> 0:20:56.040 that because you know, I forget who owns his name 0:20:56.080 --> 0:20:58.560 image likeness, but the fact that they was sold off 0:20:59.040 --> 0:21:01.920 meant that they could pretty much build the brand for themselves. 0:21:01.960 --> 0:21:03.720 And that's what we're seeing a lot with these sort 0:21:03.720 --> 0:21:07.160 of legendary artists and sort of like proven hit makers. 0:21:09.040 --> 0:21:12.280 Speaking of proven hit makers, let's talk about the live 0:21:12.520 --> 0:21:16.080 music business, which in your report I was surprised to 0:21:16.200 --> 0:21:19.720 learn given the heights that this hit last year. And 0:21:19.760 --> 0:21:24.480 this is a subject that Illuminate Intelligence in the past 0:21:24.040 --> 0:21:29.040 has dug into the phenomenon around this market, but it 0:21:29.040 --> 0:21:31.520 does seem to be cooling off, which is hard for 0:21:31.560 --> 0:21:34.800 me to understand when it's like the level of you know, 0:21:34.840 --> 0:21:37.920 you got Bruce Springsteen just finished a massive tour, Lady 0:21:37.960 --> 0:21:41.119 Gaga launches another one. It's just such a wealth of 0:21:41.320 --> 0:21:42.960 a listers on that market. 0:21:43.920 --> 0:21:48.359 Yeah, I mean, live music is certainly interesting where that 0:21:48.520 --> 0:21:53.600 industry has proven to be pretty resilient to pretty much anything. 0:21:54.480 --> 0:21:57.720 You know, there is the long held belief that music, 0:21:57.760 --> 0:22:03.080 particularly live music, is quote unquote saying proof, with the 0:22:03.119 --> 0:22:06.840 reasoning for that being that people love music so much 0:22:06.920 --> 0:22:10.920 that they are less willing to give that up if 0:22:10.920 --> 0:22:14.200 it comes to saving money versus like going to the movies, 0:22:14.240 --> 0:22:20.080 for instance, And so we're sort of seeing that with 0:22:20.119 --> 0:22:23.439 live music. And then also at the same time as 0:22:25.000 --> 0:22:29.760 ticket prices are basically increasing higher than ever year after year, 0:22:30.520 --> 0:22:34.639 that is also in part inflating what we're you know, 0:22:34.720 --> 0:22:37.639 the the year end tallies that we're seeing, and up 0:22:37.720 --> 0:22:40.800 until now they've sort of been able to get away 0:22:40.840 --> 0:22:42.640 with it. That might be too strong of a word, 0:22:42.680 --> 0:22:45.960 but like, at least as ticket prices increased, people were 0:22:45.960 --> 0:22:50.040 still turning out, especially after the pandemic. People were willing 0:22:50.080 --> 0:22:53.680 to pay big prices to go see the favorite artists. 0:22:53.880 --> 0:22:56.960 They were willing to travel and with that incur those 0:22:57.000 --> 0:23:00.320 expenses and we are still seeing that. Again, It's not 0:23:00.440 --> 0:23:04.399 like it's you know, we're seeing a nose dive or 0:23:04.440 --> 0:23:08.560 anything in live music, but we are seeing it flatline 0:23:08.600 --> 0:23:11.440 a little bit. You know, where the past couple of 0:23:11.480 --> 0:23:13.840 years was double digit growth and now we're seeing single 0:23:13.840 --> 0:23:16.040 digit growth. And not only are we seeing that for revenue, 0:23:16.080 --> 0:23:18.919 we are seeing that for attendance as well, which is 0:23:18.960 --> 0:23:20.679 sort of the real sticking point. 0:23:21.640 --> 0:23:24.960 And Live Nation, of course is synonymous with that market. 0:23:25.160 --> 0:23:27.480 So how has it impacted them? 0:23:28.320 --> 0:23:32.679 Yeah, I mean Live Nation is interesting because when you 0:23:32.760 --> 0:23:36.800 talk about them, you are basically talking about the live 0:23:36.880 --> 0:23:41.960 music business. And you know they have at least in 0:23:42.160 --> 0:23:46.600 their Q one report they started the year actually with 0:23:46.720 --> 0:23:50.800 the revenue down from the previous Q one, but they 0:23:50.920 --> 0:23:55.639 basically framed it where they focused on essentially the rest 0:23:55.640 --> 0:23:59.800 of the year, where they were like, future or sales 0:23:59.840 --> 0:24:03.960 for or future concerts is higher than ever, We're set 0:24:04.000 --> 0:24:08.120 to have a record breaking year. That certainly might be true, 0:24:08.200 --> 0:24:12.199 but that is at the end of the day. They 0:24:12.240 --> 0:24:14.480 are kind of seeing what is happening in the larger 0:24:14.920 --> 0:24:19.560 in the larger live music industry, where yes, revenue is 0:24:19.600 --> 0:24:23.160 still high, but it is slowing down in same thing 0:24:23.240 --> 0:24:25.560 with attendance and ticket sales, and then you know, when 0:24:25.560 --> 0:24:28.320 you couple what is happening with them versus like the 0:24:28.400 --> 0:24:32.480 larger changes happening like from what like Polestar was tracking, 0:24:32.520 --> 0:24:36.840 where you know, for the top one hundred worldwide tours, 0:24:37.840 --> 0:24:41.680 everything was actually like down by a couple percentages average 0:24:41.680 --> 0:24:45.200 gross tickets sold, average tickets sold, but the two things 0:24:45.240 --> 0:24:49.480 that increased was average ticket price and gross. So to me, 0:24:49.680 --> 0:24:53.720 that signals that you know, this the gross that is 0:24:53.760 --> 0:24:57.800 being created is more more and more so happening from 0:24:57.800 --> 0:25:00.680 ticket price, and we were definitely seeing that happened within 0:25:00.760 --> 0:25:01.760 Live Nation as well. 0:25:02.840 --> 0:25:06.399 Well, we'd be remissing this conversation not to touch on 0:25:07.200 --> 0:25:12.120 the artists at themselves in terms of both the top 0:25:12.160 --> 0:25:16.880 of the food chain, the chart toppers that I would imagine, hey, 0:25:16.960 --> 0:25:20.600 the more best selling acts that you get, the better 0:25:20.640 --> 0:25:23.480 the health of the market. Then again, the music business 0:25:23.560 --> 0:25:26.760 is so catalog heavy that maybe it doesn't matter much, 0:25:27.240 --> 0:25:30.639 and then also just sort of lower down the food chain, 0:25:31.040 --> 0:25:35.959 what it's like for perhaps the musicians that aren't household names. 0:25:36.480 --> 0:25:41.960 Yeah, yeah, I mean basically, like I mentioned before, for 0:25:42.080 --> 0:25:47.959 working artists. The concept of the working class musician is 0:25:48.000 --> 0:25:54.000 becoming much much less of a reality for the most part. 0:25:55.880 --> 0:25:59.720 And you know, as as much as this has been 0:25:59.800 --> 0:26:05.240 like a particularly you know, particularly strong topic for me personally, 0:26:05.359 --> 0:26:08.520