Loading summary
Transcript47 lines
- [00:00]
A
I do think there's a fine line that needs to be looked at in terms of wanting to serve these fans and provide something they actually want versus treating them like an ATM machine. Hey, welcome to trapital. I'm your host, Dan Runcy. This is your place to gain insights on the business that shapes music, media and culture. We dive deep into the companies and moguls who start the trends that shape the rest of the business world. The day is finally here. The trapital report is out and it's now live and available wherever you get trapital. We're sharing it in our newsletter. We're sharing it on this podcast, we're sharing it on our social. So if you follow us on any platform, you're bound to see it. And this is our annual breakdown. This is the second year we've done this. This is our annual breakdown on the trends that matter most in music, media and culture. We talk about streaming and and how things are starting to shift and why. We're hearing a lot more discussions in the industry about how we can grow the pie, what that looks like from a revenue growth perspective, how generative AI plays a factor, why I'm bullish on it, and a bunch of other trends too. We also talk about hip hop and where things are today. Things aren't quite as down as Juicy J tried to say it was a couple of weeks ago, but we dig into that, we actually have the data to prove and some opportunities on what that looks like. We also talk about touring and live music and the big year that it's had post Pandemic. Pandemic and some of the genre trends and why some of the genres that are popular on streaming may not necessarily look that way when it comes to live music. We also look at audience profiles, has some fun segmentations there, some of the largest exits in music, the most valuable songs in the world and more. I'm so excited about this and today I brought on the person that helped start this report from the beginning, David Boyle. David Boyle runs Audience Strategies and he worked in music and he's worked for a number of different companies around the world and helping them better understand their audience and their insights. He's so passionate about this space and he's done a lot of work in tv, music, fashion and more. And he's also done a lot of work with AI as well. He's working with different companies to help train them. He wrote a book about AI as well and we'll actually include a link to that to the show notes as well. So we talk about that. Talk about a whole bunch of trends. And this is an exciting time of year. This is our annual report. We released it last year on Halloween. We're releasing it this year on Halloween too. And I really hope you enjoy it. Here's our episode. All right. The day is finally here. We are releasing trapital second ever report. And David, gotta give you a big thanks for everything you've done to help make this possible. And I'm not gonna lie, I think I need to catch my breath a little bit. It's been a bit of a busy stretch leading up to this, but I'm really excited with where we are.
- [02:48]
B
And it always takes longer than we think it's going to take as well. Right.
- [02:51]
A
But it's one of those things. I looked at the date last year. We're consistent. October 31st, Halloween. That's when this report comes out.
- [02:58]
B
So we started earlier and then just took longer, invested more in it this year.
- [03:02]
A
But I do want to go back to an email that you sent me two and a half years ago because that's where this all started. So back Back in July 2021, you. You emailed me. I just came across your site. Love it. I just produced this annual report for dance music industry which has a lot of hip hop in it. I've been wondering if anyone in the hip hop world would be interested in a version of this report for hip hop. But I don't know the world personally. You send me the links. What do you think? Worth the chat. And then, boom, we're off to the races.
- [03:33]
B
My colleague Simon and I were like, deep into the data for that business report. Again, it's electronic music. And I was drawing all these graphs for electronic music and I just thought, hang on, so what compared to Watts? And I looked at hip hop alongside electronic music and I thought to myself, my God, that's the real story. That's massive. Massive growth in recent years. Significantly larger engagement of audiences than electronic music. So I'm writing a report for the electronic music world and I'm fascinated by the hip hop story that's in there. And then, yeah, I reached out to you after the report because I was a bit confused on honesty because a lot of people in the electronic music world had said to me, don't even bother putting hip hop on the same charts. We don't want to compare ourselves. And there's no lessons for us to learn from the state of hip hop. I just thought that was absolute bonkers. It seemed to me like they were missing the big story. About what was really engaging young people. So I, I let that go. Did those reports left hip hop in there? And I thought, let me, let me just go find somebody who understands the hip hop community, like sense check. Am I crazy or is this really the force that it looks like it is? And then like, how can we tell this story? And this was the place to be.
- [04:50]
A
I think one of the things that you were able to tease out from that report was where hip hop was at the time. Because you were the person that first shared it back in that report that you put out with IMS 2021, that it looked like things were starting to taper off from a recorded music growth revenue for hip hop. Because for past five or six years leading up to that point, as the streaming, as the streaming era continued to take off, hip hop's growth continue to go up, up and up. That's when we first started to see the reports about hip hop becoming the most popular genre of music. But you called it out. And I think that this was something that became an interesting part of that initial report that we worked on and just understanding and seeing where things were. So it would be good to hear from you where what your thought was at the time, because you saw something and you're seeing it at this point where everyone else is still leading, not just obviously leading all the way into the genre, but it's something that may have seemed much more countercultural than saying that type of statement now.
- [05:54]
B
Yeah, I think a lot of people in the industry I was speaking to at the time just didn't resonate with this point at all. And it seemed clear to me. And since now it's clear to lots of people, partly thanks to us sharing it. But streaming was growing every year and so the revenue they were making from every genre was growing every year. And they were happy. Everyone was happy. Every genre was growing. But my point was around electronic music at the time is that your revenue is growing but your share is declining. You should be very worried. Everyone's just like very happy because revenues are going up. No, your share, your relevance, your share is declining. And at the time, hip hop was growing, but it was plateauing is what we said in early 2001. It's like it had grown and if you look at the long term curve, you see how it's flattening off. And we said, I think this is the top and I think it's going to go down. And, and at the time it was like. And we hope that electronic music seizes that momentum and starts to grow. And so we called that flip, that change in direction, which is like relatively subtle on both of those curves, but really collectively makes a big difference. So, yeah, if you step back and look at it with the right way, then you can see these trends that just don't appear if you're only looking at a P and L, for example. So no one was very interested in that back then, but they should have been. As it turns out, part of the.
- [07:15]
A
Disconnect was a few things. One, like you mentioned, in 2021, the entire industry was growing. There was nearly 25 revenue growth for streaming revenue itself, year over year. The pandemic accelerated so much of that. So for you to come in and say, hey, Houston, we have a problem, no one was necessarily willing to hear that. It's almost in the same way now that some of the debates that we're now hearing about all of the streaming business model considerations or changes and things like that, these things were issues back in the pandemic. But when growth is 15, 20, 25% year over year, there's less concerns. But now that things are starting to level off to some extent, we're hearing more of those concerns. And I do think that hip hop probably had some brunt of this, but I think it was an interesting part because this is probably at least when we did the first report, one of the bigger, I don't even want to say contention points, but this is one of the ones where we dug into quite a did because you and Simon presented the data to me. And I think way be what made our work pattern work with this well, is because you share the data with me. Of course I saw it. I was like, wait, what are you talking about? And I asked a lot of the questions and a lot of them were the right questions. And I think there were certain things that you were able to provide the data on. Where I was like, okay, noted, that was helpful. Now I see where things are. But there still are other considerations that I still do hold just in terms of how certain artists are categorized in different ways and how we look at Latin artists, do our hip hop artists and things like that. How you look at the broader infiltration of hip hop and its beat production style in other genres as well, even pop and country, but how those things get labeled and even the international labels of how certain artists that are outside of the US and if they are pop artists, for instance, whether doing K pop or other genres, that still gets listed as pop, but hip hop outside of the US is only categorized as hip hop. But with that said, those things were out of your control. You're more analyzing the data based on the categorization that we have. So it brought up all these interesting points that I think were big talking points last year. It continued to be big talking points this year because we do share the data in the report and the numbers do continue to trend in that direction. Again, we brought up the considerations and there was a number of things in terms of the Billboard charts and stuff like that, but it was a really interesting point that I think will just continue to be an important topic.
- [09:49]
B
Yeah. And I think to the ways of working, that's one of the things I've been most excited about here. You know, it's great to get this story out into the world. It's great to help people with this data. But working with you has been so great because like you say, the data doesn't tell the whole story and sometimes it needs a good kick or a good poke. And you did exactly that for us. And we went back to source quite often and changed definitions and all sorts of things like that. So this is not easy stuff. We definitely got most of the way there from a data point of view. But if you deeply understand the culture, if you're immersed in the culture, then you do a better job of challenging and interpreting the data. So together we've done a much better job there. I'm really, really proud of that. I was going to say, I don't see declines as something to worry about. I see them as opportunities. If you're smart, you say, huh, something's going on here. How do I buck that trend? How do I win in that environment? How do I change perceptions or invest to do something differently? And a lot of people see declines or low numbers as negativity. I don't see that at all. I see that as a truth you can build on. I got to give an example of David Guetta. I worked with him many years ago in the music industry and I made a dumb mistake by slightly mocking and it was 90s music in the UK because it was scored really low on UK people's perceptions. We had really, you know, some quite cheesy 90s music in the UK and it lingers in people's minds. And. And I, I looked at it and laughed. I said, stay away from that. He giggled. And I, in a weird way, and I said, why? Why are you giggling? And he said, I'm going to bring that back. Like I'm gonna. He saw it a small number, like a negative number, something that was bad. And he said, no, I'm going to buck that trend. I'm going to find a way. And I think really smart people see it that way. But a lot of people in the music industry saw the notion of decline as something to worry about or hide, and you didn't. And that was smart.
- [11:38]
A
Yeah, that's cool. I actually didn't know that. And I feel like that tracks with a lot of, like, how he's made his music over the years and decades and stuff like that.
- [11:46]
B
Yeah, I'll find opportunities and go, go ride them. Don't be scared and don't run away from them. You know, data is data if it's real and find a way to use it to your advant.
- [11:55]
A
Indeed, indeed. And I do want to share some of these stats just while we have the report here. Obviously, if you've read the report, you've seen it or you can go download it. We have the link to it in our show notes. It's now available. But in terms of the genre trends themselves, when we're talking about hip hop, we're talking specifically right now on the recorded music revenue side of things. So in 2021, hip hop, and this is hip hop and R and B, because the two genres are combined at least the way that they do it in the categories. Should they be combined? They should not. That's a whole other thing. But we are not going to get into that today. The 2021 share of revenue was 27.7, and in 2022 it dropped to 26.8. But it's important to note that this is still trending with an overall industry where in 2021, hip hop and R&B's recorded music revenue was 2.72 billion. And in 2022, it was $2.78 billion. Looking at that trend line, I hope that it will continue to grow, but there is a chance that it could be not too much further above 2.8 once we have the numbers for 2023. So that'll be interesting. But like we shared in the report, pop, rock, country and dance have all pretty much stayed consistent. But it's Latin music that continues to have that uptick. In 2021, Latin recorded music accounted for 5.4% of the revenue. And then in 2022 it's up to 6.3. So there's that.09%. It essentially went from hip hop to Latin music. 2022, the huge year for an artist like Bad bunny. He had 4 billion streams across all of these platforms. But it's not just him, there's other artists as well. So there's a number of different points that factor into these types of things.
- [13:38]
B
And this is where a graph does a beautiful job because you could say to yourself, listening to this, oh, only 1% drop in market share. Yeah, so what? But when you step back and look at the long term trend, first you see this incredible steep rise over many, many years, really smooth, it doesn't wobble each year. And then you see this plateauing which we call in early 2001 based on 2020 data. And you got this plateauing which is really, really clear. And then the start of this decline and it's only 1%. But the question is, will it be a continued long term trend? In which case down and down and down and down and down and many 1% will add up or is the industry collectively? I think it's an industry level thing. It's like a hip hop level thing. Like is there something that can genuinely buck that trend? Because if not, then don't forget, like you say, Latin is growing now, not a one off thing. Also a long term trend. And if they're on the ascent in a strong way in this last year and they keep doing that, it's only going to eat into hip hop. So it's not just like little bits here and there, album launches here and there, it's long term cultural trends we're talking, talking about here. And that long term view of it really changes your thinking. So you can, you don't accidentally just dismiss a 1% trend as nothing. You say, ha, it's the start of something really clear and long term here. So now's the time to start really investing, to try and turn that around. Don't let it turn into a long term trend.
- [15:08]
A
Right? And that's where some of the concerns about some of the narratives that get put out there can be challenging because the headlines that we see that don't always provide the context, those are the things that can lead to investment decisions, marketing budgets and things like that, and willingness to sign certain types of artists from certain genres, willingness to put money towards radio budgets, music videos and things like that. So that's where some of these things can be a bit concerning, depending on how the data is shown. But hopefully reports like this can help add that additional context. I think it's also important to know too that so much of this growth has trapped, or not even growth, but so much of the, the genre shares over time have tracked with these music streaming, the digital service providers, the DSPs and how they have continued to grow, grow and expand and what their audience demographic has looked like over time. We know from the data and research and insights that it's hip hop artists and fans that do tend to move early on to so many of these platforms. You saw it in streaming, you saw it in mixtapes and ringtones and digital downloads and things like that. But over time, as all of these DSPs have grown, they have reached a lot of the market that they already have reached in areas like the us, North America and Europe. They're now trying to reach Latin America and the rest of the world. And in those regions, they are going to want to connect with their superstars. We've talked about globalization and the impact of that. That is what streaming enables. So naturally we've been able to see the rise of Latin music and things like that and how that continues to grow and expand over time. So there's each of these different factors that play in here. So, yeah, in the late 2010s, when streaming is just getting up to speed, it's hip hop that it leans on. And even thinking about things like Apple Music and a lot of those early exclusives and campaigns, those are all hip hop artists that they did that with initially. But now we are starting to see more of that international growth and expansion. And you see it even as recently as what Spotify shared in their Q3 earnings a couple of days ago, before at least the time of this recording. So it's going to be fascinating to continue to track and look at this.
- [17:22]
B
Yeah, in so many ways. And I find it quite funny, again, coming from the electronic music world, you think electronic music, electronic artists, they should be at the forefront, their audiences should be at the forefront of innovation. But it's so often hip hop artists and hip hop fans who are actually the forefront. We looked at NFTs in last year's report in more detail. Right. Hip hop artists leading that significantly above electronic music artists significantly. And then whether it's social media engagement or all sorts of other metrics, is hip hop that's leading it is that, as one person said last year when I was interviewing the industry to try and work out whether this was right or wrong, it's the defining cultural force of our time. And that is true.
- [18:01]
A
The next part we should talk about is the super fan opportunity, the $4.2 billion superfan opportunity, according to Goldman Sachs. And this is something that we dug into in the report, and it's something that is very native to the work that you do at Audience Strategies Understanding what drives consumers, what pushes consumers to do things. That's what the music industry is after right now. And this has become a bit of a hotter topic right now for many in the industry because many of us agree that streaming has been great in many ways. It did save the music industry over the past decade to be able to rebound and reach the healthier place that it is today. But streaming is a lowest common denominator product. It is built to be able to reach and serve so many of the people who can listen to music on ad supported services free of charge, at least from a direct monetary perspective. And those that are paying what's still to be considered pretty low prices to access nearly or over 100 million songs, any song that they would ever want to be able to have on demand access to. So that piece of it's there, but what does that next layer look like? What does that superfan layer look like? Especially when you look at the monetization of something like Spotify, where this is another thing that they had shared in that Goldman Sachs report. Per hour streamed, Netflix charges four times as much as Spotify does if you look at overall hour stream per the content that's there. So that's just another indication. And yes, Spotify and others have raised prices, but we just saw Netflix continue to raise its prices as well after the most recent strike ended in Hollywood there. So those trends are likely, it seems like continuing. But how can they address the superfan? I think one of the things we talked about in the report is there are platforms that are clearly growing and trying to do this independently, whether they're helping and working directly with the rights holders to do it. The DSPS are trying to do this themselves. And there's also new startups that are trying to do this as well. But I know given your work, this is right at your alley in terms of how companies can better think about this.
- [20:15]
B
Yeah, first of all, that monetization is a bit of a scandal when you look at it from a passion point of view. Almost everybody on the planet says music's important to them or is a passion of theirs. Almost everybody. And we've surveyed millions, literally millions of people over the years to ask this question. And the percentage of people who say the same thing about movies or TV or even about sports is much, much, much lower. So music is the most loved, most passionate form of entertainment of them all. That is a fact, always has been or forever we've been researching it. And so it is a scandal that that's under monetized and Then yeah, if you think about fans, we like to de average audiences. So let's take a bunch of people who don't care very much and aren't willing to spend very much, a bunch of people who are willing to spend about 9.99 and do care, and then a bunch of super fans. What streaming did was to take the bottom two and to serve them very, very well. It said, hey, don't bother with piracy. There's free options here, it's fine, which we'll monetize with ads or hey, upgrade to 999 maybe. So that will work pretty well at the bottom end in the middle. But all the people who are superfans said huh, only 9.99 excellent. And they down, they reduced their spend to 9.99 and we lost that value in the market. So the question is, how do we get it back? How do we get them to spend a level that matches their passion and that matches their willingness to spe? And while they've been out buying vinyl sometimes maybe or like incredibly expensive concert tickets maybe, how do we. I think of vinyl as being merch in that sense. How do we get them from that money from merch or from live that they're willing to spend and why don't we get recorded music willingness to spend up as well and give them recorded music related things that match their needs. Whether it's like exclusives behind the scenes, whether it's alternates and B takes, whether it's, you know, involvement or engagement with the artist around the recording process, whatever it is. But how do we get those extra like things that they're willing to pay for and how do we monetize that as part of the streaming services?
- [22:18]
A
Right. And I think at the end of the day, what fans want, they want something that offers them a feeling of identity. They want something that offers them a form of self expression. Because it's rarely about the individual T shirts, about the feeling behind the T shirt. It's not just about spending three hours watching live music. It's about the feeling and the memories and what it created and the opportunity to be able to identify with that. How do you create that on these digital platforms? For years, so many of them have been reticent to offer anything on a platform that may deter you from actively streaming music because that's what they're trying to have you do. Some of the more niche DSPs have been a bit more flexible in offering some of those things, but that's what's been there. But I now I do Think we're seeing a of lot more of the tide shifting because people do see the opportunity and it's a power law game and everyone else captures. And the thing is, if you're working solely in the recorded music side, you see live capturing the upper tier of that demand curve of who's the most interested. You're also seeing vinyl and merch. While the recording music side does have a bit more take in that to be able to help capture that. Well, definitely on the vinyl side. What are those additional things? Things. And I do think there's a fine line that needs to be looked at in terms of wanting to serve these fans and provide something that they actually want versus treating them like an ATM machine. Because I think that sometimes can be the, the difficult place there. Super fans, everyone, the eyes open up and the dollar signs of opportunity come through. But how do you do it in a way where you don't have fans complaining about your service the same way that they complain about other music related experiences and things.
- [24:07]
B
And I think that's where you got to start with the fan and really understand what is it that they want. And another great example from many moons ago, working in the music industry, I probably better not name the band, but one of the biggest bands in the world that ever has been household name band. And we showed them this group of their audience who really wanted a super deluxe physical, scarce limited edition box sets. The band had never done that. They'd never really invested in that high end. And I never forget the manager saying to me, huh? We always wanted to, but we thought we'd be ripping off the fans. You're telling me that's what they want and therefore we're letting them down by not doing it. Great, let's do it. You know, win, win for everybody. So yeah, don't treat fans as an atm, but at the same time some of them really, really want those. Like in that case, scarce physical limited edition boxes. In some cases access before anybody else, in some cases remix and outtakes. You know, different fans have different wants and needs. But you got to understand who are my fans? What do they want and that and how do I give it to them?
- [25:15]
A
That band that you're referring to clearly was likely leaving somebody on the table because this is obviously a very common practice. Now we see it across media. I'm thinking back to the days of the special DVD releases for the 20th anniversary of Scarface or whatever. It was the same exact DVD you got two years ago when they put it out. But it's like that type of thing. But I do think in music, you see this now where you have these fan bases, especially online, that will do Eddie and everything sometimes and unfortunate fraudulent behavior. But they'll do anything and everything to help their artists rise up the charts. They'll buy each of the Vinyl and the CDs in different versions and different colors and things like that to be able to have them be commemorative pieces. They'll go and stream the songs non top and non stop, and they'll start campaigns. No different than, you know, a community organizer, an activist trying to get people out to vote in an election or something like that. It's very interesting what these fan bases do, but again, that still is subset of the community. So it's never going to be a right answer. But it's all about knowing your fan base. Because the BTS army might be all about that, but another fan base may be like, no, why would I want this product? We are not BTS and we're not BTS fans. So it all depends.
- [26:29]
B
Yeah, and the beauty of it is if you get this de averaging right, if you understand your different audience segments and you do the right thing for each, like every one of them is happier. Let's take an example. May or may not be a good idea these days, but on Spotify, why don't you take all the B sides, why don't you take all the bonus content, all the extended remixes and all of the, you know, outtakes and studio demos from the, from the longer versions of albums. Take all that off, give that, put that in a premium tier because it's fans that really care about all that stuff. And what you've done is simplified Spotify for all of the mainstream music consumers. All the 9 99ers is easier for them to listen to the actual album they want without all the weird odds and ends at the end of it. Easier than to find the right version. Their playlists are all like curated playlists are all better. As a result, it's tidier and better for them. But also the superfans have got a much better experience. They've got all this exclusive content that's just theirs. They're paying for it, they deserve it and they value it much more. It tidies it up for everybody. So really understanding audiences at the heart, what can I take out of this tier to make it better for them, but also to serve super fans?
- [27:37]
A
I want to give a quick shout out to a few people who really made this report possible. First and foremost, I want to give a shout out to Simon Jacobs. He works closely with David, who you're hearing on this episode now. But Simon was really the one driving a lot of the analysis and the data. He worked us, worked with us on the report last year and helped shape it even more so this year, and I think this year's report is even stronger. So I want to thank him for that. I also want to thank the data partners that we have that helped make it possible too. The folks at Luminate and Polestar that we reached out to said, hey, we want to work on this. We want to be able to share these insights, and they were kind enough to help make that happen. And I do want to thank our sponsors and our partners to help make this report possible as well. And DICE is our presenting sponsor on the support now for the second year in a row, and it's been great to work with this on them to help make this possible. And I also want to thank Downtown Music holdings and I want to thank Audience as well. It's great to have your support with this. I'm really excited for how the support has developed over the years and I'm excited to keep going with it. Thank you all so much. Let's talk about Generative AI because that is a topic that I know is near and dear to your heart. You wrote a book about how audiences and different companies in different industries can better use this. We've been seeing more of the discussions happening in music overall. It has been, I don't want to say tumultuous year, because that would be a strong word, but I think it's been an exploratory experimentation year where certain services have been called into question for the lyrics, the voice, the likeness that they use in order to produce AI generated songs. They also have artists themselves that are willing to experiment with it. But I think you and I are both bullish and believe that this could be a huge benefit for the industry. And I think there's a few things to keep in mind here that I think about too. I think that this industry has continued to grow and develop and grow the pie, which I know is something everyone wants to do. When they found ways to increase the amount of derivative work, they found ways to work with artists and their fan bases to make things more engaging for them. And there are so many things that track with AI along those lines that can help. First off, the only songs that have went viral or gained any type of traction are based on the voice and the lyrics and the image and the likeness of artists who are already popular. So that's Something to keep in mind because when those things happen, those are things that can generate demand for the artists who are already popular. If there is a song that goes viral with Drake in the Weeknd, it's going to drive traffic not just to that song, but also drive traffic to the weekend's after hours album. That'll drive traffic back to the Drake so Far Gone album. That's how these things work, at least in streaming. And I think that if there's a way to think about it from that perspective and think about how the monetization can work out. Because this is an example that's been talked about before, we've talked about it here on trapital, but there was a similar type of issue and concern with user generated content in YouTube when that was really getting up to speed and everything. But they figured out content ID and it has become a billion dollar business for that company. And I do believe the same is possible with letting fans and letting the artists themselves work with it. Even embracing involve the experimentation. Everyone is trying to think about how do you gamify music? What is the Instagram thing like? Music that's going to increase the total addressable market. All that stuff. AI is the opportunity to do that. And I know there's several more reasons why. But yeah, I want to hear your thoughts on this because I know that you know, with creating the report, you shared some helpful insights on this too.
- [31:28]
B
Yeah, it's certainly a minefield and there's certainly lots of pros and there's certainly lots of cons. We should be honest about all of those. But I like to focus on the pros. Why don't we start there? You talked a lot about this, but on the music side, it's going to grow the pie. More people making music, having more tools that make it easier for them to make great music and more derivative works, like more great music out there and more people making music that will grow the pie of the music industry. Great, we should all be big fans of that and then say, all right, well what are the downsides and how might we best mitigate them? For example, like how might we fairly compensate artists whose work has gone into creating those models that allow other people to make work, Whether you can tell by listening to it that that artist's work fed it or not. Logically, there's some credit that should go back to the original work that trained the model. So it's going to grow the pie. I think we should all say how can we help the pie to grow? And then we should all Also say, like, how can we do that in as fair a way as possible? And then let's talk about the language model side on the writing and thinking side, which could be songwriting or writing music, or it could be business and planning your career or marketing yourself or getting your music heard by building connections with the industry. Language models like ChatGPT are much more clearly a positive in the world, much more clearly transformative to our abilities to do our jobs, to get ourselves marketed, to communicate with people in the world, and to write useful content. Clearly transformative studies show they're massively beneficial in making you faster and better and have more fun while you do that work as well. And so on that side, you've got the same ethical issues, which is, huh, I'm writing this report or I'm trying to get marketed it was trained on some other people's original content. I still should be worried about how they get paid for training the model. But my view there much, much more clearly is that the societal good from transformative new technologies for literally billions of people for free. The societal good from that is so big, it's so clear that we have to allow it and find and find ways to compensate the original creators of work, but we can't let that get in the way of the societal benefit. I think you'll find the same logic works on the music and sound side as well, but I'll let greater minds worry about that. But clearly they're both transformative. Clearly we should be excited about both of them, but clearly we should also think about the consequences and fair pay for people whose work has fed the models right.
- [34:10]
A
We do need to figure out how best to think about compensation. I know that artists like Grimes have come out and say, hey, I'll split 50, 50 with whatever you come out with. I'm not here to say whether 50, 50 is the right or wrong split, but it's that type of approach that we need to explore and we need to think about, because there should be some type of interest, there should be some type of play that makes it interesting. And for a lot of fans, honestly, that want to do this stuff, compensation may be important to some of them, compensation may not be important to some of them. So there's different considerations on their side as well. Something I've thought a lot about with this topic is the scrutiny, the test that we are putting generative AI or any of the language models to relative to actual people. There's been, of course, concerns about, okay, well, if you say that there's one artist in Particular that this large language model was based on to help generate these song lyrics for this person, then it's easy to relatively see where the consideration and where the attribution should go to. But the challenge could potentially come. If you say you want something to generally sound like a top 40 hit from 2021, then what do you do? So I've heard that feedback and I understand it. That said, even the actual artists themselves have plenty of people that inspire their music, but that didn't always necessarily have the direct compensation there. Like, for instance, if someone like Olivia Rodrigo says that, oh, my biggest inspirations growing up were Taylor Swift or Beyonce or Pink or any of these other singers and songwriters, Madonna and folks like that that came before her, that doesn't mean that they necessarily get a share of her royalty and splits like that. So there's certain considerations where it can be tough. And that's not saying that those artists need to, but it's an example of how sometimes we can hold technology to a higher threshold of scrutiny than sometimes we do. Actual artists themselves and the human side of the industry.
- [36:16]
B
It reminds me a bit of conversations in the early 2000s around, and I don't know if it's happened anywhere in the world. Like attacks on CDs, blank CDs, that would go back to the music industry. So every time someone copies music, they're using blank CDs. Why don't we just take X percent of sales of blank CDs and just give it, just blanket give it to the music industry? It's a bit like that, right? Every time language model revenue is X this year. Why don't we take a certain percent of it, give it back to music, certain percent give it to books, certain percent, give it to movies, something like that.
- [36:46]
A
Let's move on to live music, because that was one of the more interesting parts of the report there. So two things I want to talk about. First, I want to talk about this whole concept of the premiumization of live events. We've seen record revenue, we've seen the biggest concerts continue to make more revenue. Even someone like Beyonce, who had just completed at least the most recent legs of her Renaissance tour, she grossed $10.4 million per stadium show that she did for in 2023. She performed at most of those same stadiums for her 2016 formation tour. Half the revenue per show. That's how much different the average ticket price has gone. It's almost double. And it's not just her, it's Taylor. It's all of these other artists. So as we've seen the record revenues go up, we've also seen the number of shows come down. And this is even comparing it to the most recent pre pandemic year that we have looking back to that 2018-19 year since we looked at these on a half year split. And I feel like this is also a dynamic of the power line where things are just continuing to go in where things are going in music in general. While working on the report, you and I talked about the whole concept, the, the genes dilemma, the thing that you had brought up, right, in terms of the more options you get, the more you just want the genes that you could trust. We see that in music now where the more and more you have more tens of thousands of songs being uploaded to all of the DSPs on a daily basis, the more people feel overwhelmed by the options and the more they want what they have. That then incentivizes these superstars to level up their shows to the highest level. Now give you three hour sets, they put even more into production. And then now, oh yeah, here's the concert film that you can go see. And let's make that a huge box office hit. Here's this. And let's have you come travel to come see these major shows. It's, it's fascinating.
- [38:50]
B
Yeah, there's a lot going on with that, right? And it's funny, I sent you that message about the jeans as I was buying some jeans on Amazon and I remember this talk from like a decade ago about the, the paradox of choice. As I'm scrolling through Amazon, there's like 500 ways I might buy a pair of Levi's and I can't remember the exact like cut or model that I like. I don't know. So I buy them and I try them on. I'm like, yeah, kind of, but maybe it's not quite the right pair. So I don't know, like the good old days where there was one pair and you know, you got it and you loved it, whereas now there's so many artists, you know, I don't know, is that the right one for me? I'm not sure. Let me just go with the famous one that I really love. So the paradox of choice, I think is a big part. Just go with the big ones. I think we're seeing the lack of monetization of fans on the recorded music side play out as well. If Beyonce fans have lots of like, willingness to pay, that's not being captured anywhere. You know, she's saying, huh, I'll soak it up in live, let me super serve the fans. Whereas that could have been spread out and therefore the live prices could come down for other people as well. I think there's something going on multi genre here, like for sure, because I first saw this in electronic music where I had this massive disconnect. I talked to the biggest and the best nightclubs in the world and they were saying, no, no, no, things are great, we're doing awesome. And in the uk I see one third of nightclubs shut down since the start of the pandemic. So something's not right here. The big clubs are doing great, great. But the small clubs are all shutting down. Okay? It's the premiumization. And in electronic music, it's people, it's older people coming out clubbing, much more old and premium. So the average age of a clubber in a, in a physical club is going up massively over the last few years as well. So every different genre we're seeing this premiumization. I think there's lots of different root causes, but it's pretty serious. Not least because if you don't have a solid grassroots music scene, whether it's in the hip hop or live or any other genre genre, then you're never going to have the superstars of tomorrow. So we've got to invest in these grassroots celebrate premiumization because that's awesome. But also we've got to invest in the grassroots of every genre.
- [41:06]
A
Right, because that's another thing that we had shared in the report. We have that page that has the breakdown of the artists that who can sell out a tour at each level, from stadiums all the way down to the club level. The stadium artists, as you mentioned, they're continuing to do better and better. A lot of the arena artists too, and even some of the amphitheater artists too. But things do get a little bit tougher once you get down to the club level. Once you get down to some of these venues that may only have a few hundred or may only have a few thousand attendees selling those tickets can become tougher. And it's also tougher on a lot of those artists too, because costs are going up. So it's this completely different world where one of the artists that's going on a stadium run going on tour, and one of these artists that's going on a club run going on tour. It's almost a completely different product. It's two different spheres. It's hard to truly compare the two. And to your point, a lot of that grassroots things that happen, the development just isn't necessarily there. And it could be tougher to have the development because I think that there could easily be this assumption over the years before the pandemic that, okay, you may not make a ton of money on your first store, but you're putting in the work so that by the time you become bigger and bigger and bigger, you could hopefully get to the point where you're like a U2, you're like a cold play where you could rest on the laurels of this peak moment that you had, where you're able to develop everything you had and continue.
- [42:31]
B
And I think it's audience development as much as it is artist development as well. If the artists can't practice in small venues, they're never going to get to the stadiums. But also if the audiences can't practice enjoying live music, they're never going to be premium audiences a decade or two decades from now. When I grew up in my small town in England, it was rock music. That's what my friends went to see. They dragged me along and every week we'd go see rock music. It was awesome. But if there's no venues and I never get into the habit, I'm never going to buy a U2 ticket for several hundred quid. 10 or 20 or 30 years later, am I not going to practice? Electronic music is never going to have super clubs two decades from now. It doesn't have grassroots clubs today, and it must be the same in absolutely every industry. So it's critical from audiences and for artists and promoters and the rest of the industry, we've got to invest in the grassroots.
- [43:19]
A
This is something that we see especially with hip hop and R and B overall, because we wanted to do this comparison based on a few hunches we had, and the data proved it. Hip hop and R and B, despite the leveling off that we talked about earlier in this episode, still the most popular in terms of the streams and the recorded music generated. But things flip when you look at the live side. Hip hop and R and b accounts for 11% of the US concert revenue in the US in the past year, compared to pop and rock, accounting for 27. And again, that 11 for hip hop and R B is compared to 27 that it captures for streaming revenue. But pop and rock, it's 27 for the concert revenue compared to 33% for the streaming revenue. You combine those two genres, so why the big difference there? Hip hop and RB can dominate URL when you're looking specifically on the streaming side of things. But when you go irl and you're trying to go outside things Flip. And I think there's a few reasons why this is both on our analysis but also talking to some people in the industry. The first is age. Hip hop and R and B are much younger genres and they have much younger fan bases. We don't have Rolling Stones that have continued to tour and tour over the year. And even the artists that we do have that are and rose to power around the same time. There were other challenges which we'll get to in a second. The second piece I want to talk about is the historical bias here, which plays a factor into the age piece because for so many years concert promoters were quite hesitant to promote rap due to violence and safety concerns. Even though rock concerts and Woodstock 99 and all that stuff had even worse obscene issues. It was rap concerts that in many ways took a bit of the brunt. So it wasn't until the 1999 Hard Rock Life tour that we saw a rap show have another arena concert tour the way that it did, let's say back in the Run DMC days. And it really wasn't until Jay Z's Live Nation deal, the first one that he did in 2008, that you really saw the global expansion for hip hop as a global touring product in the way that it's easier to do today. The third reason of course want to talk about is just price and willingness to pay there because live can be expensive ticket. And even though younger audiences stream, a lot of the people that are still attending these concerts are the boomer generation and some of the older Gen X. And those are audiences and groups that have a lot more disposable income. We talked about development as well. That factors into the historical bias. I'll talk about this artist because he's been on the podcast before, but I look at artists like Rick Ross, has some of the biggest hits in the world and has someone that has been so influential on the hip hop side. I don't know if he necessarily put in the same work or if he was in an industry that had the infrastructure to be able to put in the same work to develop him as a touring artist because he's someone that has clearly done so well on the recorded side, he's done so well from the other business ventures. But I think he's someone that may still rely a bit more on the club runs and things like that as opposed to or doing music festivals. And I think that's a whole nother piece of how certain festivals like Day in Vegas and Rolling Loud have combined a lot of the demand for artists, so they're now doing those and getting the checks instead of doing their own tours. So we could talk about this for a while, but those were some of the differences of why hip hop and R and B may be dominating on the streaming side, but less so on the live side.
- [46:57]
B
Yeah, it's really fascinating when you break it down. And I guess one thing I was thinking as you talk through that and also when I've had conversations with the industry on these topics, is there are very few people actually who think about like hip hop overall. Like the labels think about the labels, artists think about optimization within the current ecosystem. You know, life is focused on live. But if I were, if I were sat at the top of hip hop, I would be saying, how can we build out grassroots venues in more cities to build and nurture an audience and to nurture talent and to feed that ecosystem system? But there are very few people with that kind of overall viewpoint. Also in electronic music, there's people who run super clubs. That's great. There's people who run grassroots. That's great. But there's nobody thinking about that overall ecosystem. And so the interplay isn't really being thought about. No one really cares about it.
- [47:45]
A
Agreed. Yeah. And hopefully improve soon. I do think that developing those venues, as you put it, some of those places did shut down. Some of those places had been acquired since in the pandemic. So there is a bunch of changes that are happening and may continue to happen even as we continue to see some of these venues. And some of these areas still try to make their ways to bounce back from the post pandemic. But I think a lot of this taps into understanding the audience, where they live and what they're willing to do. And this taps into the really fun part of the report that we did, which was the audience segmentation piece. And we have the two parts about what it looks like to reach the pop consumer and what it looks like to reach the hip hop consumer. And we'd love for you to talk about that because that was one of the really cool value adds I think we have with this report.
- [48:32]
B
Yeah, and we've talked about the audience so much on this, this podcast that I really think is the heart of absolutely everything. If you can understand the audience and particularly if you can break them down into the different groups that make up your audience, it's much easier to do absolutely everything, make every single decision. So what we did this time was to take the audience and this time we Took the US Audience overall, and we broke them down into the different communities that exist within it, the different segments that exist within it. And then we said, okay, which segments does hip hop working really well in? Which kind of. But not so much and which not at all. And then we did the same thing for pop music and other genres, and we can do the same thing for artists or brands or all these types of things. That way you get a really clear picture for each genre or for each artist or for each brand. Like, who is your audience today? Or who are the two or three audiences you've got today that you can super serve should you want to? Who are the two or three audiences that next Audiences that they're kind of engaged and if I do something differently, I can grow by reaching them. And who are the two or three audiences you shouldn't bother with because they're not that interested and it would take a radical change to go get them. So stop worrying about them, stop being distracted by them, and just focus on where the, where the revenue is or where the growth is going to come from. So we did this for the US population, and particularly we profiled hip hop and pop audiences to see who they were, what the differences are.
- [50:02]
A
Let's talk about. Let's use pop audience because I know we've talked about hip hop a good amount of this episode, but let's use the pop audience. And this was interesting because there were three main communities that we found by looking at the graph of the users that are on X, formerly Twitter. The first is people that are active on YouTube. So these are the people that are always online, they love their faves. And it's a lot of the people that may lean towards your Harry Styles, your Shawn Mendes, your Biebers and folks like that, but they also follow a lot of their other personalities, folks like the Dolan twins or Cameron Dallas, and they have their own subplots and things. It's really this fascinating culture where I talk to my cousins that are currently, whether they're on the early side or late side of Gen Z, and they know about this stuff. And even me as someone that I feel like it's my job to tap into this stuff. I feel like I learned something new. But you understand that what works for them, having campaigns that focus on vibrancy and immediacy for their interest. And you need to be contemporary and relevant the same way that YouTube itself is that you need to have that. And there is a strong leading as well here towards a more female demographic where it's over 80% of the folks that are there. So that was really interesting. The second group is folks that are more interested in teen pop culture overall. And I call this list the people that may show up on the most influential people on the world list that you may be interested in the people that are often among the most followed on different social media platforms. Your Taylor Swift, Rihanna, Kylie Jenner and the whole Kardashian crew, Billie Eilish, folks like that. But then there's often some overlap with a lot of the social media influencers that I put. But they still probably skew a bit more to the big names. But here it's about your versatility and campaigns need to focus on the latest trends, but you don't want to come across as irrelevant. So that's a big piece there with tapping into what's the latest or pop culture. And the third group. And it was funny. I have to give a shout out to Michael Jones, who helped with editing this report when I share this with him. He looked at this group called Moms and he said, am I a mom? Based on the description here. But this is the oldest community segment of the pop consumer. But oftentimes it is moms and that group that want to hear a blend of the stuff that they're familiar with, but also what they may know. And looking at a lot of the parents now that are starting to have kids. It's a lot of the people that may have grown up watching MTV during its heyday or watching bets 106 and park and things like that. These are now the people that are watching Real Housewives and the shows on Bravo. They're watching Love and Hip Hop and they're listening to the podcast after each of those that are covering them like a SportsCenter recap. And what does it take to tap into this group? It's the nostalgic allure. It's also having things that have the contemporary appeal with the kids. So it's people who may know more about Doja Cat than they let on, but they still are pretty tapped into that. But they also have their own outlets that are more fit for them that they want to either catch up with their friends and talk about, too. The interesting thing about the group for Community 3 is that they often can drive a lot of the purchases for the other two groups because these are all people that can live in the same household. Right? The person that's active on YouTube could be the daughter, and then the person that's the mom could either be the father or mother or the parent in some way that's tapped into there. So I really like this one. And I think these are the type of things that we could do for additional folks that may want to have a deeper analysis, but really enjoyed those insights.
- [53:39]
B
Yeah, it's fascinating to see. Yeah, where are we now? And also, what's next? If you want to look at pop music and say, all right, well, where could we grow? Like, which segments are next? It changes everything about how you make plans or the kind of strategies that you adopt, whether it's marketing or product type strategies. I'll give you another David Guetta example from back in the day here. We worked with him on exactly this type of problem. And at the time, he had a bunch of electronic music audience segments, a bunch of electronic music communities were absolutely his core fans. But it was exactly these pop segments that were his next audience that he needed to conquer. And of course, fast forward to today. We know that he's conquered that audience. We know he's absolutely won that audience. But really careful adoption of those segments of those communities, really careful, like stepping into their world and being in their media channels and partnering with the artists that they love and celebrate. Like, really careful strategic use of these audiences is how you grow your career while keeping your core audiences satisfied. Like, keep doing what it is that they want and starting to reach out to these new audiences. So absolutely transformational. If you see the world this way and you can carefully plan segment by segment, you know how to win. Great stuff.
- [54:54]
A
Moving on with the report, I want to talk briefly about two sections here. So one, the most valuable songs in the world. So one of the things that we did that I wanted to do because there's just so much continued activity with the catalog sales and the music rights acquisitions. What are the most valuable songs in the world? Because this also is a power law game. Win. People are acquiring the art, the catalog for an artist. Sure, there may be hundreds or even thousands of Bruce Springsteen songs, but there's probably only a few that are driving all of that revenue that are the ones you really want. And as music has been unbundled, we have the ability to be able to see, at least on the platforms that share the information publicly, what songs those were. So I won't share the full list, but we did do a segmentation of songs that had, at least on Spotify, we did this. At least a billion streams on Spotify. They get at least a million daily streams and they're at least 20 years old. So those first two, of course, were objective thresholds. To be able to share something on past performance, something on current consistency, because what you continue to do matters more than what you've done in the past. And the 20 years old piece matters too, because you get past the huge streaming numbers from songs that may come out and release on streaming and get a big bump. But more than 20 years old. You're talking about songs that came out before music streaming took off. So you're able to get some of the lifeline there. I won't name all the songs on the list, but I gotta say, I was surprised to see multiple. Well, actually, I know I wasn't surprised. Let me clarify that. But the fact that there are multiple Eminem songs on here has always been interesting because I think he's one of the people when if you ask someone who has the most valuable music catalog out there, he probably isn't the first name that would come to mind. I think a lot of people especially that may be in certain circles may look at a lot of his music and think, okay, it has an age, the best, and it's a symbol of a time that we're no longer into that perspective. But that isn't what everyone thinks. We're not a monolith. And he has several songs that have billions of streams and several songs that hit that threshold too, without me and Lose Yourself specifically. And there's a few other songs like that in the list. So it's always fascinating to dig into stuff like this.
- [57:11]
B
Yeah, it's incredible to get data, hard data on this and as you said on the audiences piece a minute ago, see the world through other people's eyes. Like we all know good chunks of the industry, like really, really well. And it's when you pull data in like this or the audience's piece, you start to say, huh, how does the rest of the industry operate? These bits that I'm not familiar with, but my God, they're big. For me, that was going from electronic music to hip hop, or from segments I knew to segments I didn't know very well, or songs I don't know very well as well. So that's the power of data to color in the bits of the industry you don't know very well and line them up next to the bits you do.
- [57:47]
A
Definitely. And with that, we have a few other important pieces that are in the main report as well that are either in the overview report that we have for the Trapital report, we also have breakdown on the top 1% of artists, what that looks like. We have a similar breakdown that I shared on the most valuable songs and what that looks like for YouTube. We also have some startup exit details looking at some of the most valuable companies that have exited in the space, but also those that are currently private, that might be the next one up. And it was really fun to work on. So again, if you're interested in downloading that, you can check the link in the show notes for this episode. You can get that. We also have a premium version of the report as well that goes more in depth on a few of these big topics that we talked about. And we do get a bit deeper into some of the strategy, some of the insights to be able to help you make the key decisions that you have there. We talk about more on Superfan insights, we go deeper into revenue trends, we have more of those charts and graphs to be able to show certain things. We have more about the challenges that new artists face today, middle class musicians, the short form video wars, and more about some of these generational preferences that I think are important. And it also comes with 45 minute call to be able to talk with you about some of the results as well from the report and how important it could be for your business. And we get to dig in and chat a bit more about that. So if you're interested there, we also have the link for that in the show notes too. And with a 45 minute call you get to talk to be and then either David or Simon on the Audience Strategies team. So we're really excited about that.
- [59:22]
B
Yeah, I can't wait to get stuck into this with some real, real examples. Whether it's an artist maybe or a label or a club or a festival promoter or a brand, like seeing all this data through their eyes and thinking about which bits are most important for them. And what does that mean? Like what should I do differently in those shoes? Like where are the opportunities? That's where this gets really, really fun. We've done our best in the overall report, but those individual conversations are going to be gold.
- [59:50]
A
Right? Because I think at the end of the day everyone has access to a lot of the same channels. And especially in this industry, I feel like I see a lot of the things that do seem like carbon copies of each other, but who are the people that are willing to think a bit outside of the box? How do you be a bit more thoughtful about how you spend the dollars to be able to do more effective things? Let's have those conversations. So I'm excited to make that happen with this report and with that I do want to give A few special thanks and shout outs. I do want to shout out Simon Jacobs from Audience Strategies that you work with, David, for all the help that he did. I want to thank our data providers as well, specifically Luminate and Polestar to be able to help share some of the recorded music and live revenue pieces as well. I want to give a shout out to our presenting sponsor, dice. I also want to shout out the supporting partners as well, audience in downtown for the work that they did to help make this report possible too. And yeah, it's been really exciting and great to work with all of you on this.
- [60:47]
B
Yeah. And I gotta say again, all that data is great and that's where my real passion is, like hard data that underpins all these strategies. But your expertise and your knowledge of all of the artists and what's happening in culture combined with that data has formed such a powerful combination. I wish I had a Dan in every other project I work on in every other industry. I really do. There's something incredibly special there that, you know, the data alone does not do it. There's a magical Dan or capital factor on top of that. Thank you.
- [61:20]
A
Oh, well, thank you. That, that really means a lot. I mean, it's been a pleasure to work with you on this and yeah, that's why I wanted to spend the time out to read that email in the beginning of the episode because, yeah, it was, it was a game changer and it's been really great to work with you over the past couple of years on different things. And yeah, I do think that you similarly, you get it, you understand how it works both in this industry, you understand how it works overall in other industries. You're always doing inventive and cool things. So yeah, it's been, it's been really cool to be part of the ride as well. Thank you.
- [61:54]
B
Yeah, it turns out putting audiences at the heart of decision making is quite good fun and allows people to do things really differently.
- [62:02]
A
I know, definitely. Well, thanks again for that. And then for the folks listening again, you can download the report and read it in more detail, please. If you listen to this full conversation, you're going to love this report, so please check it out. The link to download the report is in our show notes.
- [62:16]
B
Thanks. We can't wait to see what you do with it.
- [62:21]
A
If you enjoyed this episode, please share it with a friend. Send it to one or two people you think will would really get value out of listening to this episode. And while you're at it, if you could rate interview the show, that would be great. Rate the podcast on Apple Podcasts, Rate the podcast on Spotify. Rate the podcast wherever you listen to podcasts that helps make sure that the word gets out about trapital and what we're building here. Thanks again for listening. Talk to you next time.