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I.B. BAD ON THE PRIMACY OF
THE PLAYLIST

While the drama surrounding Frank Ocean, Apple and UMG plays out, Spotify—a huge source of revenue for the rights holders—has begun to push back against those Apple exclusives by threatening to remove artists’ music from the service’s playlists, at the same time the Daniel Ek-led company is trying to secure better terms from the rights holders as they renegotiate their deals moving forward. Spotify is said to want to pay less for those rights, and there will be no IPO until those new deals get signed. As part of said new deals, it appears that Spotify will offer a pay-tier-only option to the rights holders as well as a modified limited-access free tier, which is expected to launch around the end of September.

According to insiders, Spotify execs told Florida Georgia Line the duo would be the first act to get the premium-tier-only treatment if the pieces were in place prior to the 9/9 release of Dig Your Roots (BMLG). When it became apparent that the new feature wouldn’t be ready in time, FGL made a deal with Apple Music for a two-week exclusive—whereupon Spotify promptly pulled all of FGL’s music off its playlists. This tug of war led to a Solomonic compromise: FGL would give a two-week exclusive not to Apple specifically but to all premium services. The decision seemed to satisfy Spotify, because FGL’s songs began to reappear on its playlists. Does the value of the Apple marketing juggernaut outweigh Spotify’s playlist-removal threat? Apple’s presence is embedded in the creative center of the business, and its musical dominance in the U.S. gives it a huge advantage as these decisions are being made.

As the accompanying chart indicates, UMG has forged ahead of the field in streaming marketshare during this pivotal year with 38% overall to Sony’s 28% and WMG’s 17%, which is not dissimilar to the sales-based marketshare standings year-to-date of 35, 28 and 18%, respectively. Not only that, but Lucian Grainge’s music group has a stunning 52% share of the 100 most-streamed albums YTD, and 45% of the top 1,000.

Some of the credit for UMG’s streaming success goes to Jay Frank and his team. As the company’s Global Head of Streaming Strategy, Frank and his staff of around 20 are masters at working the playlisters in the massively important user-generated sector, which is the primary springboard for new singles. Much of Frank’s work takes place deep underground. For example, U.K. artist Jonas Blue’s remake of Tracy Chapman’s “Fast Cars,” which was a modest U.K. radio hit but never got traction on U.S. radio, has quietly accumulated 500m streams and sold 4m worldwide, which could generate roughly $10m for UMG by year’s end. “This Girl,” from Kungs vs. Cookin’ on 3 Burners, another act that’s far from a household name, has been streamed 250m times worldwide since it became available at the end of May, and like the Blue singles as well as several smashes from UMG stars, is expected to hit 1 billion streams by the end of 2016. This phenomenon stands as a dramatic example of how radically the business is changing.

On a related subject, the majors have been chasing unsigned Aussie newcomer Joel Adams, who’s already racked up 60m streams on Spotify and appears ready to break out worldwide—but Adams reportedly has rebuffed all offers, opting to stay independent and reap the financial benefits. Are we witnessing the birth of a generation of Spotify-created stars, as happened with the previous generation from massive YouTube exposure?

NAMES IN THE RUMOR MILL: Tim Cook, Eddy Cue, Jimmy Iovine, Doug Morris and Stephen Cooper.

 

 

A HOLLY, JOLLY
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EGGNOG!
Ours is mostly bourbon.
MISTLETOE!
Delicious in salads.
CHESTNUTS!
Ours are roasting, but it could be these slim-fit jeans.
WEED!
An entire Christmas tree made of it. Is what we want for Christmas.
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