• Manager article part 5

Music Business News, January 18, 2017

A report indicated there are more paying subscribers on music services than on Netflix. Also, Apple Music announced plans to introduce a video platform. And industry executive Gregg Nadel was made head of Elektra Records.

 

Manager article part 5

 

Paying Subscribers Flocking to Streaming Music Services

 

There were 100.4 million paid subscribers across streaming music services at the end of 2016, according to a recent report by Midia.

 

Music Business Worldwide said industry analyst Mark Mulligan’s estimates stated that about 43 million of these were subscribing to Spotify, 20.9 million to Apple Music, 6.9 million to Deezer, 4.5 million to Napster and one million to TIDAL. The remaining subscriptions went to a combination of other platforms.

 

This subscription base showed a 48-percent year-on-year increase on global music body IFPI’s 2015 figure of 68 million.

 

Netflix’s end-of-year numbers in 2016 showed 87.8 million paying subscribers, showing it grew by 24-percent last year.

 

Prior to 2016, the total number of subscribers to audio music services has been behind the number of users that only subscribe to Netflix. Netflix will announce its official Q4 2016 figures today.

 

Despite this win for the music industry, Netflix is still garnering larger revenue than streaming services. Netflix is expecting streaming turnover of $2.34 billion in the fourth quarter of last year, representing the first time the company has taken in over $2 billion in one quarter. Its revenue grew consistently every quarter.

 

Spotify’s entire annual revenue in 2015 was $2.18 billion. For further context, about 77 million people are using Amazon Prime’s video service and subscribing to Amazon Prime video itself. This brings Amazon and Netflix’s combined total paying audience far beyond Apple, Spotify, Deezer, Napster and other streaming music platforms combined.

 

Apple Music Expanding to Video

 

Apple Music head Jimmy Iovine said this past week that the platform will soon include a video component.

 

Tech Crunch reported that the news of Apple Music’s foray into video was first reported by The Wall Street Journal in early January, which reported Apple’s move to bring in producers to help create TV series and movies for an larger Apple Music service.

 

Iovine confirmed these reports while speaking at the Television Critics Association press tour last weekend about how Apple Music can diversify in order to differentiate it from rivals like Spotify, Pandora and Amazon.

 

Iovine stated, “At Apple Music, what we’re trying to create is an entire cultural, pop cultural experience, and that happens to include audio and video.”

 

He hinted that the video offering will go beyond just music videos and musical shows, although the company has purchased James Corden’s Carpool Karaoke and Dr. Dre’s Vital Signs, a semi-autobiographical scripted TV series.

 

Iovine explained, “If South Park walks into my office, I am not going to say you’re not musicians, you know? We’re going to do whatever hits popular culture smack on the nose.”

 

The executive also provided insight into how Apple plans to make its service rise above rivals like Spotify and Pandora, whose focus has been converting free users to paid subscribers.

 

He said, “We’re fighting ‘free.’ So a simple utility where, ‘here’s all the songs, here’s all the music, give me $10 and we’re cool’ is not going to scale.”

 

Apple Music does not have a free tier beyond its initial free trial, which makes it different from competitors. Spotify said that 80-percent of its paid subscribers started as free users, which is why it keeps providing a “freemium” level.

 

Not only has Apple made its music platform pay-only, but it also shut down other free streaming content such as iTunes Radio service. And this strategy has been working for the company. In December, Apple said its music service now has 20 million paid subscribers, half of what Spotify has. However, Apple also benefits greatly from owning the platform; this allows it to promote its own content and services through built-in apps on its hardware.

 

Apple has already released some unscripted video content, including a Taylor Swift concert and a Vice docuseries. It will also feature a reality-style show called Planet of the Apps.

 

Apple is not the only company getting in on streaming video. Spotify launched its video component in 2016 and provided content from ESPN, Comedy Central, the BBC, VICE Media, Maker Studios, MTV, TED, NBC, ABC News, Vogue, Elite Daily and others, then expanded to offer original programming featuring artists, biographies, live performances, etc.

 

Gregg Nadel Made Head of Elektra

 

Long-time Atlantic/Elektra A&R and marketing executive Gregg Nadel was named president of Elektra Records, according to Billboard.

 

Nadel has been at Atlantic Records Group for 20 years and running the label since the former GM stepped down in September 2015. Nadel was responsible for signing Zac Brown Band, Sturgill Simpson, Kaleo and others. He also worked with Ed Sheeran and Coldplay.

 

Atlantic Records co-chair and CEO Craig Kallman said, “Atlantic has a homegrown tradition of nurturing our leaders from within the family and Gregg is a shining example of that philosophy … he has literally grown up at this company, evolving into one of the most gifted and admired A&R people in the business, whiel at the same time becoming a marketing ace for superstars and new artists alike.”

 

Co-chair and COO Julie Greenwald added, “… Gregg is a real rarity in our business – a great A&R guy who can also put together an outstanding marketing campaign from the ground up.”

 

Elektra Records was founded in 1950 by Jac Holzman. Its roster included artists like Judy Collins, The Doors, The Stooges, the MC5 and Love. Other acts on the label have included Metallica, Bjork and Missy Elliot.

 

Elektra merged into the Atlantic Records Group after Warner Music Group’s sale by Time Warner and relaunched in 2009 with artists including Fitz and the Tantrums and Kaleo.

 

Holzman said, “I’ve come to know and admire Gregg’s passion for new music … The quality of his choices, and his willingness to go out on a limb – all key to having multiple successes.”

 

Nadel commented, “I am thrilled to be part of a new chapter in the history of this revered label … Having spent my entire career in the Atlantic family, being given the opportunity to oversee one of its legendary labels is a dream come true.”

 

Nadel joined Atlantic right out of college. You can also read his older interview with Music Consultant, “Modern Day A&R.”