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THE BIG BET, PART 1
Streaming Is Fueling a Metamorphosis of the Music Business

After a decade and a half during which the music business was unable to stem the ever-deepening decline in sales, streaming is finally providing the industry with a healthy backbone. In the first six months of 2017, thanks primarily to Spotify and Apple Music, total consumption (album sales + singles sales + streams) was 293 million equivalent albums, up 9.9% from the same period a year ago, according to BuzzAngle’s midyear report. The bulk of that consumption has been generated by streaming, which has grown to just shy of 180 billion streams, a year-over-year increase of 58.5%. As a result of this dramatic growth, paired with associated lowered overhead, budgets for deals and marketing activities are on the rise and a sense of risk-taking is returning to the music business, as the majors double down on their pocket aces.

We’re already seeing who can win at this new game in which streaming is the driver. It’s the players who capture and analyze data the quickest, then make calculated investments based on their findings. In some cases, it means casting a wider net for artists. At the same time, the majors are showing an increasing willingness to create JVs or finance imprints for artists and writer-producers with hit-filled track records.

Meanwhile, artists are putting out albums at a faster clip than in the past, when high-profile releases were typically separated by extended touring cycles. Nowadays, superstars are finding there’s a beast with a voracious appetite for the new out there, and they’re eager to feed it. As a result, artists such as Drake, Kendrick Lamar and Rihanna are delivering music at a far faster pace than the previous generation and, in turn, are getting through deals much more quickly. One Direction, another prolific act, were in a position to renegotiate their deal after album number three.

It’s now a seller’s market thanks to streaming, which has done far more to level the playing field than downloading ever did. Still, the majors continue to bring an element to the table that most indies lack: global strength, media opportunities, radio, etc. And the smart majors are looking for the acts, especially in the pop, R&B and hip-hop sectors, that already understand how to create buzz on their own. Because these days, a single can make a star.

A STAR IS BORN…ON SOUNDCLOUD

“What many people are overlooking is that the audience that matters—the tastemakers who are anointing the new contemporary stars (and this is as true for R&B artists like Party Next Door, Bryson Tiller and SZA as it is for the rap kids)—are on SoundCloud.” So notes HITSMichelle Santosuosso [right], who adds that for many A&R reps, the beleaguered but vital service is their secret sauce.

SoundCloud, Michelle S. further points out, “is where the musically passionate, highly coveted actives are; the audience that tells you where things may be trending and where the curators like me live. And I guarantee a huge portion of A&R people under Mike Caren [below left], including an entire intern staff, are combing over the service to find the music that is on the come-up—which is why Atlantic finds so many of these young acts first.

“There’s an authenticity on SoundCloud because of its users and posters, and that relationship, which extends to the comments on the song files themselves, encompasses an entire culture,” she continues. “DJs, remixers, producers and artists use it as a platform to post new music, a dynamic that does not exist on the more ‘selected for playlist’ scenarios of Spotify and Apple Music, both of which also require a more ‘traditional’ music-delivery system to get things ingested.

“Soundcloud is like a radio station—you upload that file and just like that you’re on the air. It’s more real-time and much more dynamic than other streaming services. This does not, however, apply to GO, the paid tier. Nobody fucks with GO.”

Here’s a pair of breakout artists launched on SoundCloud:

XXXTentacion, a 19-year-old Floridian, has accrued 1m SoundCloud followers. His producer Rojas posted the track “Look at Me” while the aspiring rapper was sitting in jail. This is part of the lore of his uprising— XXXTentacion blew up on the Internet while doing jail time. Empire is going for reports on “Look at Me” at Rhythm radio this week—after the track racked up more than 90m plays on SoundCloud.

Playboi Carti, from Atlanta and signed to AWGE/Interscope, has 350k SoundCloud followers. 
He too was an Internet star at 19, coming up on SoundCloud starting in 2014, which led to his being co-signed by A$AP Rocky. Like Rocky, he’s created a discernible brand centered on style, but he keeps a low profile on other social media, which has actually ramped up curiosity about him. Carti’s track “Magnolia,” however, is all over social media as a meme-able anthem; think endless Snapchat party videos. The track is currently #23 at Urban and #27 on the Mediabase Rhythmic chart. According to Michelle, “This kid is known as king of the ad-libs but is from the ‘mumble rap’ movement—a newer hip-hop subgenre that includes Migos and Lil Yachty as well as Future and Desiigner, and they're all from Atlanta.”

Kyle, one of the 10 acts on XXL’s annual Freshman Class cover this year, took a somewhat different route to a record deal via the single “iSpy” with Lil Yachty. Prior to its release in December, Kyle had issued two albums via the L.A. management and content owner company Indie-Pop, Smyle in 2013 and Beautiful Loser two years later. The debut sold 15k copies and was streamed 60m times; the follow-up had sales of 12k and 74m streams, but the video for one of its tracks, “Keep It Real,” scored a million views. Atlantic saw enough activity to sign the Ventura, Calif.-based rapper, and they’ve been blessed with an unstoppable hit. “iSpy,” released jointly via Yachty’s labels—Quality Control/Motown/Capitol—and Kyle’s—Indie-Pop/Atlantic—has 257m streams, 221m video views and sales of 758k downloads. Off that single—there’s no album yet—Kyle has been able to tour as a headliner in clubs and at festivals, having done 34 dates in the spring and ready to hit 19 U.S. cities beginning 8/26 before heading to Europe for October shows.

...Read Part 2

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