Music Biz on the Rebound: Assessing the State of the Industry for Concerts, Songwriters, Publishing, Music Discovery and the Latin Explosion

Jem Aswad, Cata Balzano, Geoff Mayfield, Ellise Shafer and Chris Willman
·18 min read

Is recorded music pandemic-proof? Data collected by the Recording Industry Assn. of America measuring U.S. music revenues in 2020 demonstrates the market’s resilience. The RIAA year-end report, released Feb. 26, reveals that the industry as a whole grew 9.2% in 2020 to $12.2 billion at estimated retail value.

It marks the fifth consecutive year of gains, as paid subscription services continue to expand their reach among the music-listening public — to the tune of $10.1 billion in overall revenue generated, a growth of 13.4%. Streaming now accounts for 83% of all U.S. music industry earnings, which encompass physical sales, syncs and digital downloads.

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The uptick in music consumption during lockdown has dovetailed with other booming screen-centric activities, from Netflix to Twitch to Clubhouse, but anything involving more than one human in close physical proximity has suffered economically or had to adapt.

Recording is only one aspect of the thriving global music sector. Here’s a look at five key trends and questions as the industry looks to rebound from the COVID-19 shock.

Will we soon see a half-billion-dollar catalog sale?

Bob Dylan’s catalog deal with Universal Music Publishing Group fetched between $300 million and $400 million, 33,000 songs from Kobalt Music to Hipgnosis Songs Fund got around $323 million and the masters from Taylor Swift’s first six albums cost Shamrock Capital around $300 million. In 2020 and into 2021, music IP is sizzling, with no sign of demand waning.

Most of the action has been in the song rights and publishing space, stirred by London-based Hipgnosis founder Merck Mercuriadis’ aggressive pursuit of songwriters’ shares.

That hunt began when Hipgnosis plunked down $23 million for the catalog of rapper, writer and producer The-Dream in 2018. The company has gone on to spend more than $2 bllion on music assets. It started by betting on works by younger creators like the Chainsmokers becoming tomorrow’s classics, but its focus soon extended to heritage acts like Neil Young, Fleetwood Mac, Barry Manilow and Chrissie Hynde, whose catalogs can command multiples of 20 or 25 times earnings.

“The number of assets is finite and getting smaller, and the number of buyers seems to be infinite,” says veteran music attorney Peter Paterno of the fervor for music IP.

Adds Mark Mulligan, managing director of music and tech think tank MIDiA Research: “What’s driving the value of the asset isn’t just how much money it’s making — it’s how much demand there is in the market for those assets. Revenue performance could increase by X, but the actual value of the asset might go up to Y because there are few assets in the market and everybody wants it.”

What’s fueling the interest of investors? Streaming allows songs to make money for a longer stretch with a more predictable revenue flow than when the industry relied on selling albums or singles. The potential of sync placements and samples adds icing to the cake, as does the notion that “song management” will allow more focus on individual works than a publisher, which is responsible for tens of thousands of works at any given time. Last, artists are willing to sell, in part because the pandemic has all but halted earnings they would have seen from touring and merchandise.

But just because you can cash out doesn’t mean you should.

“If you believe the market’s going to keep getting better, you shouldn’t sell,” warns Paterno. “I’ve been involved with a lot of deals on both sides when the artist who sold regretted it later.”

Another noted attorney, Donald S. Passman, author of “All You Need to Know About the Music Business,” concurs, offering historical examples of deals made too soon.

“Elvis Presley sold his artist royalties; Led Zeppelin sold their artist royalties. Those were big deals at the time, but in retrospect they turned out not to be such good deals,” Passman says.

Even so, could demand soon drive a catalog’s price to the $500 million mark?

“There is that possibility because the market is overheated,” says Mulligan. “[Looking at] the historical average prices paid, they’ve been going up and up for about three years now. The curve suggests that we will be getting to that sort of size deal.”

Few will reveal their guesses publicly, but the short list of big fish suggested by Variety’s sources include Paul McCartney, Bruce Springsteen, Barbra Streisand, the Eagles, Guns N’ Roses, Metallica and Jon Bon Jovi.

“It’s clearly going to happen,” says one insider. “It’s just a matter of when.”

—Geoff Mayfield

How is the concert business doing?

It may feel like the setup for a cruel joke, but against all odds the live-entertainment industry is faring better than many expected. Promoters and agents are looking to a partial reopening in the second half of 2021 — Live Nation has made a big bet on outdoor and smaller concerts returning in the late summer — while continuing to find ways to generate attention and revenue via livestreamed performances, virtual meet-and-greets and other activities.

In the U.K., Prime Minister Boris Johnson’s announcement that “nightclubs and large events” can reopen by June 21 prompted Live Nation to announce rescheduled dates for three major festivals, selling some 170,000 tickets in four days. The company then saw its stock soar based on enthusiasm for its timetable, despite recently announced quarterly earnings in which revenue declined by a sobering 92%.

Live Nation CEO Michael Rapino says that if vaccinations and other factors go according to projections, many states may start seeing shows “in midsummer,” noting that Southern outdoor venues can draw audiences “all the way into November.” The company has made a similar vote of confidence for traditional arena tours returning: The Weeknd’s twice-postponed “After Hours” tour has been rescheduled for January 2022, with multiple dates added.

Those target dates seem “realistic,” given vaccine projections, says ICM’s Mark Siegel, the agency’s head of worldwide concerts. However, every major festival in the U.S. scheduled before late August is moving its date or has been canceled. “Depending on the venues and the audience, things should pick up a bit in July and August, and even more in September.” Siegel also says he’s expecting the first months of 2022 to be “the biggest quarter in the history of the concert business.”

Andy Gensler, executive editor of the live-entertainment trade journal Pollstar, notes that many venues in the South, particularly those specializing in country music, already have comparatively robust concert schedules lined up for March and April, and points to the Pepsi Gulf Coast Jam in Florida, with headliners Luke Bryan, Brad Paisley and Lynyrd Skynyrd, which is still scheduled for early June. “Because so many states have different restrictions, concerts have been coming back in fits and starts all over the place,” he says. “It’s a bit of a free-for-all.”

While the touring industry’s eyes are very much on the horizon, promoters and agencies have found ways to pivot over the past year. Livestreamed concerts have made enormous progress and even become lucrative for certain artists. Rapper Travis Scott held a virtual concert in the video game Minecraft last May that drew an initial audience of 12.3 million — and 27.7 million unique participants including the four replays, according to Pollstar. In a more conventional terrestrial setting, British dance-pop singer Dua Lipa’s “Studio 2054” livestreamed concert, with tickets priced at $18.50, drew an estimated 5 million-plus viewers, according to her reps. K-pop titans BTS have staged a series of livestreamed concerts over the past months, drawing millions of viewers. Even acts with smaller fan bases, like alt-country singer Rhett Miller and former Barenaked Ladies frontman Steven Page, have made a decent living performing on platforms like StageIt, Nugs.net and Zoom.

“Does it replace concerts? No,” Siegel says. “But money is being made, and people are busy and being creative.” He points to virtual connections, which ordinarily are an add-on to concerts but have become a business of their own. “Zoom meet-and-greets are actually better in some ways,” he says. “Normally the fan gets 30 or 60 seconds and a photo, but now they’re going on for three, five, seven minutes — ‘What are you drinking? Yeah, that’s my drink too!’ — because artists miss their fans so much.”

Adds Gensler: “For the past year, every day we’re getting so many calls — ‘When are we coming back?’ There’s no better symbol of society’s return than a concert.”

—Jem Aswad

What’s happening with music discovery?

It should come as little surprise that much of music discovery in 2020 happened on the small screen. Of the more than two dozen music streaming apps currently available for mobile phone users, TikTok, which finished the year in second place among the 100 most downloaded apps (behind Zoom), led in music industry breakouts. TikTok delivered an astonishing 1 billion combined video views for 176 songs.

To hear the company tell it, TikTok has become the great democratizer when it comes to giving everyone an equal chance of breaking out. Unproven newcomers with a following, like Dixie D’Amelio, have an instant shot. An Irishman who sings sea shanties? Nathan Evans is his name, and he landed a deal with Sony Music thanks to his rendition of “Wellerman.” Rappers like Erica Banks (“Buss It”) and CJ (“Whoopty”) become instant household names, following the road paved by the TikTok-assisted success of Megan Thee Stallion, while alt-pop has also found a home thanks to such artists as carolesdaughter (“Violent”) and Jessia (“I’m Not Pretty”).

Isabel Quinteros, senior manager of music partnerships and artist relations at TikTok, says the platform’s algorithm “is why it’s the best app for music discovery. … TikTok distributes content based on performance and interests, allowing for good content to have a wide reach despite how many followers you may or may not have.”

Indeed, Quinteros reports that more than 70 artists who launched from the platform have been signed to labels since she joined the company in April 2019. Major labels have been quick to snap up the artists with the largest followings — think Hitco Entertainment with D’Amelio; Warner Records with Banks and Nessa Barrett; and Curtis Waters with BMG — and are reaping the rewards of having an existing dedicated fan base that generates millions of streams with little to no marketing. Even more impressive: Five TikTok hits reached No. 1 on the Billboard Hot 100.

The TikTok playground is extending to other music platforms too. Spotify’s viral charts practically mirror TikTok’s most popular tracks, while it’s not unusual for Spotify’s most popular playlist, Today’s Top Hits — with more than 27 million followers — to favor TikTok trends. The last in line is often terrestrial radio, which, while nimbler than in past years when it comes to adding a song to a station’s rotation, remains conservative in programming new or unfamiliar artists to its listenership.

“These Gen Z users, they don’t need to listen to the radio to determine whether or not they want to buy a song,” says Chris Anokute, an artist development specialist who founded the company Young Forever, where he manages artists such as Waters. “They’re literally engaging on these social media platforms, seeing visual content synced to song, loving the song, identifying the song and then legitimately going to find the song.”

Even a 1.0 version of discovery is coming back into fashion on TikTok as music blogs proliferate on the platform. MostleyMusic, which boasts 233,000 followers, offers track reviews, music history lessons and of course, emerging artist recommendations. A similar trend on Instagram hasn’t proven to be as sticky.

Whether a career kicked off on TikTok lasts long enough to achieve true longevity has yet to be seen, though there are a few with a decent head start — Megan Thee Stallion and Lil Nas X among them.

“I think TikTok will evolve with the culture,” Anokute says. “As people get out more and go back to festivals and live shows, TikTok will be there as another marketing driver to story-tell.”

—Ellise Shafer

How has songwriting adapted during COVID?

Streaming is at the forefront of songwriters’ concerns on two fronts. One, of course, is shrinking royalty checks for most writers, as low-paying streams have supplanted higher-paying sales in music consumption. The other is a new problem — or, in a manner of thinking, solution — that’s arisen during the pandemic: the phenomenon of most writing sessions lately happening via streaming, via Zoom, instead of in person.

“Writing over Zoom sucks,” says Michelle Lewis, executive director of Songwriters of North America (SONA), whose advocacy on the part of creators helped lead to the historic Music Modernization Act of 2018. For one thing, forget about jamming over the platform. “If you’ve ever tried to sing ‘Happy Birthday’ over Zoom” and realized that no one is in unison, she says, “you understand that it’s a latency thing: You just can’t do it.”

Says Sarah Hudson, the co-writer of Dua Lipa’s “Levitating” and “Physical” (and, further back, Katy Perry’s “Dark Horse”), “It’s been a real buzzkill for me, personally, having to do Zoom writing, but obviously I am making it work. A lot of writing sessions are like blind dates, and it’s cold over the computer. I am not really a fan of it — but I can do it with a few writers I’m really close with.”

Sam Ashworth, who has co-written much of H.E.R.’s material and was Golden Globe-nominated with Leslie Odom Jr. for “Speak Now,” says he initially resisted Zoom co-writing, too, because “a lot of times, at their best, songwriting sessions can be like counseling sessions. I don’t think people are as prone to get as personal over video as they can be in a room. And the physical connection of being in a room with somebody, reading body language and facial movements, just being able to sense whether something is hitting somebody in a good way or not… there’s just something magical that happens when you’re co-writing in a room together, especially if you’re hitting it off with that person and there’s a connection there. I think you can get to places that are so much deeper in person, so I was very resistant to Zoom at first. And there’s the whole technical side — I’m on with my guitar and another writer’s on with their guitar and we can’t sync up time-wise, so it’s really like a whole new dance.”

Yet Ashworth sees an advantage to the new way of writing that may survive the pandemic. “An opportunity came up to do a writing camp with an artist in Colombia. And, I just thought, ‘Well, that sounds like a lot of fun.’ and that’s not something I’d be able to do unless I flew down to Columbia.” Even the writing camps that would normally take place closer to home have been supplanted by Zoom… and could stay that way, to some degree. “We’re spending less money, which is great,” he admits. “Even after things go back to some semblance of normalcy, because it’s been normalized, I think we’ll see more and more Zoom writing mixed in with the in-person sessions.”

Adds Nashville-based Tracy Gershon, president of the song publisher Northern Lights Music: “Look, everybody will be really excited about getting in the room together” when in-person sessions are the standard again,” but Zoom ain’t going to go away because it’s really a cost- and time-effective way to get writers together that you normally couldn’t.” In her native Nashville, she says, “I talk to writers who really like it. People tell me it’s more efficient because they can get in and out and don’t feel like they always have to go to lunch.”

Payment issues continue to be a downer for the non-1% among songwriters. “There used to be writers that made a living off album tracks,” points ous Gershon. “They didn’t have the commercial singles, but they specialized in having a couple deep cuts on a record where you’d go, ‘What an incredible song,’ and they made a great living, if they were on a bunch of albums that went gold and platinum. I don’t think the deep cuts exist anymore or, when they do, they’re hard to monetize. Having a single is king.”

SONA’s Lewis says money anxiety is increasingly a drag on writers’ creativity. “if you’re not getting paid, you’re not thinking about your next song — you’re doing math,” she says. “Every songwriter I know has to have some alternate source of income. Sometimes it’s within the industry, like managing artists or being a graphic designer, but most are driving Uber.” Yet, she adds, “you can actually make a decent living from streaming if you have some participation in the master recordings, because the recording is worth seven to 12 times the copyright in the streaming formula. That’s something that some successful songwriters who have leverage have been able to demand.”

On the legislative front: Lewis is celebrating the Feb. 16 announcement that the Mechanical Licensing Collective had $424 million in accrued historic royalties it will be handing out to writers and publishers, once it’s determined who’s rightfully owed the money in the coming months. “It’s the punchline to the MMA [of 2018]; it’s what we were fighting for,” she says of the so-called Black Box of unclaimed royalties. “We’re heading in the right direction. There’s still a lot of work to do” — especially with “short-form video stuff, like TikTok and things like that that are completely unlicensed. But as these new platforms are coming up, we’re better positioned to be in the room for the negotiations about how much we get paid for them.”

Has the pandemic affected the tone of what’s being written? Yes, says Hudson, who’s seen how her hit single with Lipa, “Levitating,” written before quarantine, has helped people figuratively float through it. Right now, imagining how music fans might feel in six months or more, she, like many of her peers, is seeing a light at the end of the tunnel and doing anticipatory writing. “I can’t stop thinking about going out and dancing and being with my friends; it’s definitely reflected in what I want to write. I’m inspired by thinking of us all together again, feeling free. I’ve gone that route more than I have the sad or dark route.”

—Chris Willman

Why is Latin music thriving?

In the three years since Luis Fonsi’s “Despacito” became the first song of any genre to log a billion streams on Spotify (between the original and the remix featuring Justin Bieber, it’s now up to 2.6 billion), Latin music has only expanded its reach.

According to MRC Data, which tracks music consumption, Latin artists thrived on streaming services in 2020 — with a 14.8% gain, the genre led all others in growth — with acts like Bad Bunny, J Balvin, Rosalía and Karol G driving momentum.

“Something we’re seeing, and it’s a big difference, is that Latin artists are doing it in Spanish,” says Victor Gonzalez, president of Universal Music Latin. “The recognition is that music in Spanish is breaking barriers in the U.S. through streaming.”

Alex Gallardo, president of Sony Music U.S. Latin, agrees. “Streaming definitely changed the ecosystem in the music industry,” he says. “Prior to this era, If we wanted our music in Germany, we needed to convince someone in German radio or German TV to play our music. The good thing about streaming and this globalization is that we skip those gatekeepers and we can get directly to the fans.”

Reggaeton and Latin trap lead the new surge, but streaming is lifting cumbia and Regional Mexican too — take Snoop Dogg’s recent teaming with Banda MS on “Qué Maldición.”

Indeed, successful collaborations have given Latin a big look in the pop world — they include Dua Lipa with Bad Bunny, J Balvin with Justin Bieber, and the Weeknd and Maluma track. “We hear from all our label partners, ‘Hey, all of a sudden everyone is calling to collaborate with our artists, and that never happened before,’” says Mia Nygren, Spotify’s managing director for Latin America.

Adds attorney Marjorie Garcia, who represents several Latin acts: “It’s not just Anglo artists. Italian artists reach out to me, Portuguese artists — it’s global. The streaming numbers are killing it, so when they do these collaborations, they get a boost on their monthly listeners.”

The enthusiasm is spreading to the brand world. Witness Balvin’s recent deals with McDonald’s, Corona and Guess, which Garcia negotiated. “Whereas before you were lending your name and likeness to a brand, in the past couple of months, the type of deals that I’m doing have all involved equity,” she says. “Both the brand and the artist are looking for long-term gains.”

—Cata Balzano

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