🔵 Yes, big changes are coming in the music industry. No, that doesn't make it a bad thing.

Why Spotify's two-tier royalty approach is sowing seeds for disaster, and what might come after that.

Private responses to Tuesday’s Network Notes have certainly been plentiful. A minority were to the tune of “well said!” (always nice), but most were bearing down on me for being so negative about the future of the music industry.

Allow me to clarify then: I don’t think the changes I have written about are a bad thing. Change is only bad if you are incapable of adapting and changing with it.

That was the music industry’s big mistake when piracy first broke out with Napster, Limewire, WinMX and co. The view was that you could somehow stuff the genie back in the bottle and Joe Public would simply return to buying CDs.

Of course, in reality that was far from the case, and one might argue that the music industry’s failure to lean into change and adapt with it delayed the market’s recovery by a good number of years.

The same problem will present itself in time with the bifurcation of the industry into the big artists (those who, for now, have more than 1000 plays per annum on Spotify) and the smaller artists (those who fall below that threshold).

To be clear, that 1,000 plays limit is not, in my view anyway, a massive issue in itself, though it might prove to be when it inevitably rises upwards towards a value potentially ten times that. As I’ve said before now, any artist with a track earning less than 1,000 plays per annum on any DSP was making so little money from it that they would be largely ambivalent about this change, from a fiscal point of view.

Really, the problem is in the two-tier world it creates. This is where - in my view anyway - Universal’s deal to take revenues from the lowest-earning artists on Spotify and hand it to the richest will, in time, massively bite them on the backside.

Look around already and the narrative has been set.

Damon Krukowski

nailed it when he posted Luminate’s excellent diagram, pointing out that just this teeny, tiny blue and yellow portion at the top of this triangle are the songs that will now receive royalties under Spotify’s new royalty accounting:

Source: Luminate

Again, I don’t feel this is actually about the money; it is about the message it sends to new artists. The peril of creating any kind of two-tier approach is that those not benefitting from it will go and find other places to focus their time and energy. When they do that, you run a risk of them building their own ecosystem in which existing DSPs play no real part.

Couple this with epochal changes in tech that will further enable everyone to become a creator, and you create a pretty troubling scenario. As Universal seeks to shore up its own revenues, arguably rearranging the deckchairs on the Titanic by screwing over the little guys, it misses that it is sowing seeds for a disaster further down the line.

These changes are a very real prospect to me, but I feel the point here is to lean into that, to understand what’s going on and act accordingly. Right now it feels like more labels than most might be thinking the existing model can continue working, and that streaming is bulletproof for some time now.

I suspect that might not be the case - not in the form we currently know of anyway - and that working to understand the emerging creator economy and how that is functioning is key.

Ironically, if you look at music creation companies they understand this, too. There is a reason companies like LANDR are offering distribution now, not just mastering. I think Beatport (disclosure: a Motive Unknown client) seem to have understood this landscape ahead of most too, working as it has to expand horizontally and take something of a “cradle to grave” approach in which it is capturing customers from the earliest music-making start point by selling them plugins via Plugin Boutique and samples via Loopmasters, through to release via its Ampsuite platform, through to retail on the Beatport store itself, then on to performance in clubs via its Beatport Stream DJing product. That is a company understanding that it is important to be involved at every stage here.

So yes, change might be coming in time, but the goal here is not to see these things as negative, maudlin views: it is to highlight what’s coming and ask “how are you preparing for that? What will you do to remain sharp and compete?”

Have a great evening,

D.

🎶 listening to “Tears” by Skrillex, Joker & Sleepnet. This popped up again in a chat with music-making colleagues about the incredible sound design going on in this track. Some parts border on the indescribable - I mean how would you explain what’s going on around the 1m02s mark?! Someone told me Skrillex apparently did sound design work on one of the Transformers movies. Makes total sense, listening to this.

📺 watching the “Spaceman” official trailer. Still of the view this could be an amazing film and a career highlight for Adam Sandler. Directed by Johan Renck too, who previously directed music videos for a panoply of big names.

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Stories from the Music Industry:

EU targets music streaming platforms to ensure fair pay and visibility

The proposition was made to ensure European musical works are accessible and avoid being overshadowed by the “overwhelming amount” of content being continually added to streaming platforms like Spotify. MEPs also called for outdated “pre-digital” royalty rates to be revised, noting that some schemes force performers to accept little to no revenue in exchange for greater exposure.

👆🏻Hot take: the key fact to note here is that this is not coming to pass in law and might not for some time. In principle, there’s much to like here… the question is really whether any of it will actually happen.

Pitchfork’s absorption into GQ is a travesty for music media – and musicians

It is bleak on so many levels, first and foremost the job losses during a straitened time for media. Pitchfork was one of the last stable music outlets going – where else are they, and the site’s hundreds of freelancers, meant to work now?

👆🏻Hot take: an unpopular view maybe, but I’m only surprised it has taken this long for Pitchfork to come to this. The minute it was sold to Condé Nast, this was the inevitable outcome, sorry.

Stability AI’s former VP of Audio launches certification for AI models that respect copyrights

The initiative, launched on Wednesday (January 17), aims to provide consumers and businesses with a transparent way to identify AI models trained on data acquired with consent from creators, potentially influencing the industry’s approach to copyright and creative rights. Similar to organic food certifications, Fairly Trained’s “Licensed Model” certification evaluates and certifies AI models based on their training data sources.

👆🏻Hot take: it would be great to see this picking up pace. Really though the issue here is in how much people value any such certification.

Hipgnosis offers £20m carrot to potential bidders for its assets

In its filing revealing the £20m carrot, HSF said that shareholders who own more than 60% of its shares think this call option “constitutes a material conflict of interest for the Investment Adviser and acts as a significant deterrent to any third-party potential offerors who might seek to acquire the Company or its assets”. Hence the £20m. The questions now are this: will this tempt potential buyers? And what will HSM and Mercuriadis make of it?

👆🏻Hot take: the very fact that it has come to this kind of behaviour only underlines just how incredible it is that this obviously conflicting arrangement ever came to be signed off in the first place. A lesson for the future in how never to structure a business.

Triller owes music rightsholders more than $23m (which it doesn’t have the cash to pay). Oh, and it’s just purged 200m bot/duplicate accounts from its platform. Oh, and it still wants to IPO.

Many, erm, ‘eye-opening’ facts about Triller – which has made various proclamations about floating on a US stock exchange in recent years, without actually doing so – are revealed within the new amendment’s ‘Risk Factors’ section. They tell a story of a company facing various legal problems and financial uncertainty. Here are four of Triller’s most surprising declarations – including the one where it confirms having raised over $420 million from investors to date…

👆🏻Hot take: Triller is starting to remind me of semi-legendary startup Songmix, in that it is a wonder it has made it this far with investment money being thrown at it over what looks like relatively questionable user numbers, among other things.

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Stories from the Broader World of Tech:

Microsoft’s new Copilot Pro brings AI-powered Office features to consumers

Copilot Pro is launching today as a $20 monthly subscription that provides access to AI-powered features inside Office apps like Word, Excel, and PowerPoint alongside priority access to the latest OpenAI models and the ability to build your own Copilot GPT.

👆🏻Hot take: Microsoft really aren’t messing around in their ambitions to be the market leader in the AI space. These integrations do feel valuable though - I just hope Google’s implementation of AI across its properties will be even better, given the sheer potential in that prospect.

Instagram’s new ‘nighttime nudges’ aim to reduce teens’ time on the app

Teens will start to see a notice that says “Time for a break?” followed by the message “It’s getting late. Consider closing Instagram for the night.” The social network told TechCrunch in an email that the nudges will appear after 10PM. The nighttime nudges will be shown automatically and can’t be turned off, which means teens can’t opt in or out of seeing them.

👆🏻Hot take: a good feature to see, albeit one that should have been implemented years ago.

Sundar Pichai warns Google staff more layoffs are coming

Pichai’s memo said the company will have to make “tough choices” to meet its ambitious goals, as reported by The Verge. The CEO said this year’s cuts won’t be at the scale of last year’s job cuts, where the company let go 12,000 people or 6% of its workforce. “These role eliminations are not at the scale of last year’s reductions, and will not touch every team. But I know it’s very difficult to see colleagues and teams impacted,” he said in an email to staffers.

👆🏻Hot take: still very curious to see where all these unemployed tech staff will go, and what will come of that. It could kickstart a great age of innovation… or a migration out of tech, commencing a “tech is not all it is made out to be” kind of narrative.

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Need something else to read? Here you go:

The Danger of Digitizing Everything

The creep of conducting our day-to-day interactions over screens has reached a breaking point—and it threatens to push out everyone but those with the “right” access

👆🏻Hot take: another piece highlighting how tech is not really working for us any more. What seems like a solution - in this instance, using QR codes to link to information on a website, rather than simply provide the info on a page - has all manner of failings.

Why Do We Buy Into the ‘Cult’ of Overwork?

Overwork culture is thriving; we think of long hours and constant exhaustion as a marker of success. Given what we know about burnout, why do we do give in?

👆🏻Hot take: a good longer read about the culture of overwork, how it came to be, and how damaging it has proven to be in terms of dehumanising staff.

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Who am I and who are Motive Unknown?

I’m Darren and I’m the MD of Motive Unknown. I started the company back in 2011. Since then we’ve grown to a team of 20, representing some 25 indie labels in the marketing strategy space, as well as working with artists directly.

Our artist clients cover anything from top-tier pop (Spice Girls, Robbie Williams) through hip hop (Run The Jewels, Dessa), electronic (Underworld, Moby) and more. Our label clients take in Dirty Hit (The 1975, Beabadoobee) Partisan Records (IDLES, Fontaines DC), Domino Records (Arctic Monkeys, Wet Leg), Warp Records (Aphex Twin, Danny Brown), LuckyMe (Baauer, Hudson Mohawke), and Lex Records (MF DOOM, Eyedress) among others.

Recent recorded music clients to join the family include Because Music (Christine & The Queens, Shygirl), Dangerbird (Grandaddy, Slothrust) and London Records (Bananarama, Sugababes).

In addition to our recorded music division, we also have a hugely successful growth marketing division which has a strong focus on the music creation space. Our clients in this space include Beatport, Plugin Boutique, Loopmasters, UJAM, RoEx, Krotos, Rhodes and more.

Click here to visit our website.

Want to chat? Just hit reply to this email.