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DIVING IN: MANAGERS PONDER STREAMING ISSUES

Ian MontoneSarah Stennett and Crush's Bob McLynn and Jonathan Daniel join fellow management machers Jordan FeldsteinGreg ThompsonSeth EnglandPhil McIntyreRyan Chisholm, Bruce Kalmick and Jonathan Kalter in addressing the implications of streaming for artists in this wide-ranging conversation. Dive in.

Have we reached a point where there is a correlation between streaming numbers and the size of a venue an act can play on tour? Is it different between the genres?
Bob McLynn: Sometimes yes, sometimes no—depends on the artist. Look at the examples of terrestrial radio in the past. If an artist had developed a fan base, then later some success at radio, radio usually helped grow the live audience—sometimes exponentially. But we could also name plenty of artists with #1 singles who couldn’t sell out a coffee shop. There are new songs and artists that come out of nowhere daily now and register a billion streams, but that won’t mean anyone is invested in them enough to actually go out to a show. The way music is consumed has changed drastically over the last decade; there are some different avenues of artist development as a result. But don’t mistake that for shortcuts. You still need to develop the artist to have a viable career.


Ryan Chisholm: If you have one song with massive streams, I don’t think that will necessarily result in ticket sales. If you’ve been able to connect the dots and have a number of songs with millions of streams, you’ve shown that you have a true audience. Spotify’s “Monthly Listeners” count can be a bit misleading, especially when it’s driven by one song—and major playlists. If you’re seeing a high save rate and a large percentage of listens coming from fans’ collections, you know there are fans out there who are more proactive than passive. These are the artists who can build a touring base with or without commercial radio.

Phil McIntyre: Not yet.  

Seth England: That is to be determined, in my opinion. We’re starting to see our new act Chris Lane sell out clubs all across the country. His streaming numbers might be lower than “new pop artist X,” because pop is so much bigger on streaming than country, but that new pop artist X isn’t necessarily worth a ticket yet. So I think it’s all relative, and you have to do a deeper dive on the data beyond just the overall streaming number. The good news is that you can break it down market by market and know where your hot zones are. Then it’s up to the act and their team to go attack those markets and put on a memorable show they can build off for years to come.

Bruce Kalmick: It’s the sum of all parts for us on venue sizes and touring capacity. We don’t look at streaming to determine venue size in any genre.

Jordan Feldstein: Yes, we look at streaming numbers overall and on a market-by-market basis to determine touring. Whereas SoundScan and radio airplay previously determined this, now streaming helps assess these decisions.

What is the impact of streaming? Is it mitigating the impact of radio? 
Ryan Chisholm: In my experience, streaming is fueling radio. For Mike Posner’s “I Took a Pill in Ibiza,” we were at nearly 30m streams globally before we took the song to radio in the U.S. I think all of us are looking at streaming data, Shazam chart positions and sales numbers to encourage radio to get behind a record. The Paper Kites have a song called “Bloom” that has over 50m plays on Spotify after three years and is now getting a real shot at radio internationally. The streaming services are cultivating audiences and creating lanes for artists who don’t fit into the mainstream pop world. It’s a beautiful thing, especially for a company like Nettwerk.

Seth England: The impact of streaming is going to be revolutionary for our business in a lot of ways. The obvious is revenue-generated, but I think potentially a bigger key is revenue saved. I don’t think you will see the impact of radio change, but you are now arming labels with a previously untapped toolbox. Formerly, labels could only see how many downloads a song had received, which didn’t show us all that much in consumer behavior compared to what we have now. We now have many tools within the streaming platforms to gauge how a new record is doing, and once we find one—you know it’s time to add the jet fuel to it.

Greg Thompson: Streaming is great and offers tremendous insight into the consumer’s reaction and appetite for music, but radio still provides the window to open the funnel full-throttle and take you to the masses.

Ian Montone: I think the jury is still out on the effects of streaming on radio. I’m concerned the “traditional” business will try to reshape Spotify and the others into something it understands—in other words, this is the new radio, so let’s speak in those terms and build that traditional infrastructure around it. To me that would be a shame and a massively missed opportunity. I would rather see the streaming companies push the traditional music business to evolve.

What is the impact of streaming, particularly in the country genre?
Clarence : Amanda Cates, my Head of Marketing and Digital Strategies, puts it this way: “Streaming is changing the game across the board in all genres. In country music specifically, I think it’s bringing our music to millennials and keeping the fan base young and relevant. Having a presence where they are consuming is paramount, and it’s not necessarily via country radio anymore. It all stems from their smartphones and being able to take their music wherever they go and listen to whatever genre they want, whenever they want. This presents the challenge to us to make sure our music stands out on playlists, that we embrace the diverse listening patterns that fans have and take the data that our streaming partners share to make better decisions on how to get our music, artists and tickets in front of fans who will love it and want to experience it on a deeper level. I look at streaming as a way to better enhance experiences and engage with true fans and those who love music.”

“I’m concerned the ‘traditional’ business will try to reshape Spotify and the others into something it understands—in other words, this is the new radio, so let’s speak in those terms and build that traditional infrastructure around it. to me that would be a shame.”—Ian Montone


How does the growth of streaming affect the way you approach a new recording contract?
Bruce Kalmick: It causes me and the attached attorneys to take a good hard look at the potential for all streaming revenue streams. The artist has a right to collect on certain revenue streams outside of the recording agreements, and that needs to stand up. But more than anything else, I want to see a team of people focused on exploring the growing consumption rates. If the label has a team of people forging a new road on the interactive front, it always builds confidence in a potential deal.

Phil McIntyre: We live in a hit-based universe. You need great partners to have hits. I think the structure of deals will change, but great partnerships and a collaborative approach will remain.

Jonathan Daniel: For the past several years, we’ve tried—unsuccessfully—to switch to 50/50 on streaming. A boy can dream, can’t he?

Sarah Stennett: Significantly. I think everyone in the business is paying very close attention to any provisions affecting income from streaming.

Jonathan Kalter: I’m still betting on my ability to make a deal that pays the artist a percentage relative to the amount of work they’re going to have to do to promote and support their release(s). The artist needs a chance to recoup if they succeed, and, once they do, they need to receive an appropriate share of the revenue. But as a side note, some streaming—video specifically—is famously poorly monetized, so I would require a label that would let management and the artist weigh in on when it’s time to worry about monetizing at a higher rate and when it’s time to make sure all the real fans can experience the content.

With streaming a growing percentage of revenue for the record companies, are you seeing the same growth on your artist royalty statements?
Phil McIntyre: No, it feels like it is shrinking. That being said, it feels like a moment of transition. Royalties might be declining for the moment, but the excitement for great music overall feels like a new high. It feels like the start of a new resurgence for the music industry overall.


Bruce Kalmick: As consumption increases, so do the royalty statements. I have also worked on a couple of very lucrative catalog-owner-rights deals for interactive revenue streams, and the payouts are considerable, so you just have to be tied into the opportunities to bear fruit from the changing economy of music.

Jonathan Daniel: I don’t think I could answer yes to that without my nose growing, Pinocchio-style. Sia is one of the most streamed artists in the world, but I would not say streaming is a significant portion of her income, so I can’t imagine it is for any artist yet. That being said, we’re extremely bullish on streaming; we’re certain it’s the future. I still have some MP3.com stock options if you’d like to buy some, by the way—I can frame them for you in a nice commemorative “remember the late ’90s” frame.

Jonathan Kalter: My independent artists love Spotify. I repeat—my independent artists love Spotify.

Sarah Stennett: I don’t think it’s an exact mirror growth
—yet! 

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