MBW Reacts is a collection of remark items from the Music Enterprise Worldwide crew. They’re our analytical (and generally opinionated) reactions to main current leisure information tales.

It’s been a curious week for these of us with a blue-tick Twitter account.

Once I say ‘us’ btw, I don’t imply ‘me’; my private causes for fleeing the bully-bird’s cage have been a lot, however can basically be summed up in two chirps:

• (i) I’d seen sufficient scorching takes and phony remonstrations to acknowledge the tawdry guidelines of Twitter’s numbers sport. If I’m to spike my night cortisol with interactive nonsense, I’d relatively accomplish that taking part in PlayStation;
• (ii) Finally, I put meals on the desk for my children with phrases, and I didn’t wish to habitually piddle these phrases away to counterpoint gazillionaire Silicon Valley bros (Jack, Elon)… for nothing.

So after I say ‘us’, I imply ‘us’.

As in, Music Enterprise Worldwide, and another enterprise whose on-line presence continues to hold Twitter’s once-prized blue verification protect.

You will have learn within the media that Elon Musk is now promoting blue-tick verification for a month-to-month subscription worth.

What you may not have examine is Musk’s persist with this carrot: like a canny gangster, Twitter has begun robbing its customers’ technical safety, earlier than, seconds later, providing to switch it… for a tidy sum.

On Wednesday (March 22), Group MBW acquired the next e mail from Twitter informing us that our Music Enterprise Worldwide profile now not loved two-factor authentication.

(When you weren’t conscious, two-factor authentication = receiving a novel code every time you go surfing to a service with a purpose to guarantee nobody dodgy is hacking into your account.)

Guess how one reinstates cell two-factor authentication on Twitter? Yup: Begin paying Elon for a month-to-month subscription.

That is Musk taking part in hardball: “How a lot do you worth the safety of your Twitter account? Are you prepared to threat being hacked and unmentionables being tweeted out in your identify? If not, pay up.”

So, begrudgingly, we’ve needed to.

There’s a wider enterprise lesson to be discovered right here: Elon Musk’s stone-hearted resolution to start out promoting a vital service profit that we’ve lengthy grown accustomed to having without spending a dime.

That concept, in flip, has dropped at thoughts the Good Ship Spotify, and a captivating slide from one explicit presentation at SXSW in Austin final week.

Stated presentation got here from Rob Jonas, CEO of Luminate, the leisure market monitor and insights supplier that was as soon as often known as MRC Information and Nielsen Music. (You possibly can take heed to Jonas’s full SXSW presentation via right here.)

The related slide inside Jonas’s presso is the one you’ll be able to see above, based mostly on Luminate information. It delivers some jaw-dropping info.

Initially, verify this: There are 67.1 million tracks sitting on music streaming providers at the moment that, within the 2022 calendar 12 months, attracted 10 or fewer streams apiece, globally.

That 67.1 million determine represents just below half (42%) of the whole catalog of tracks out there on worldwide music streaming providers as you learn this (based mostly on IRSCs).

(The whole catalog of music on these streaming platforms is comprised of 158 million tracks in whole.)

Put together your self for the following statistical haymaker: Almost 1 / 4 (24%) of the 158 million tracks on music streaming providers monitored by Luminate in 2022 attracted ZERO performs that 12 months.

That’s roughly 38 million tracks. 38 million! Zero performs!

Not one single sausage finger pressed a forward-facing arrow beneath the art work of any of those songs, on any streaming service, anyplace, at any time, within the entirety of the three hundred and sixty five days of 2022.

It’s virtually sufficient to make you cry.

Not me, although. It made me consider Spotify.

As our common readers could recall, in November MBW revealed an article that exposed some startling stats concerning the amount of cash Spotify pays Google annually to be used of its cloud storage services.

Spotify doesn’t publish a exact determine for what this Google cloud storage prices it yearly. However SPOT does publish, in its annual SEC-filed report, the financial yearly improve in its firm prices for ‘utilization of cloud computing providers and extra software program license charges’.

What this implies: MBW is ready to determine the minimal quantity that Google’s cloud storage providers (plus different software program licenses) are costing Spotify yearly.

To repeat that: The beneath chart represents the minimal quantity Spotify is spending on these providers annually. The fact is probably going far (i.e. multiples) costlier.

(We’ve been in a position to replace the beneath figures for FY 2022, as Spotify filed its newest annual report, for final 12 months, in Q1 2023.)

Query: If Spotify is now shoveling a good-looking nine-figure price over to Google annually for cloud internet hosting providers, the place is the income coming from to cowl that invoice?

Reply: proper now, that income is coming from Spotify’s three sole revenue streams: (i) Promoting; (ii) Subscriptions; and, to a a lot lesser extent, (iii) On-service advertising and marketing charges paid for by the music business.

In different phrases, these hefty cloud internet hosting prices are instantly consuming into Spotify’s margin at a time when analysts throughout Wall Avenue are baying for Spotify to extend… its margin.

However what if Spotify was to take a leaf out of Elon Musk’s e-book RE: two-factor authentication?

What if Spotify additionally began ruthlessly passing on the price of a utilitarian technological profit to its particular person B2B shoppers (aka artists) – however this time, for the cloud internet hosting prices required to maintain music out there in its library?

Particularly if it began instantly billing, below menace of takedown, the thousands and thousands of artists behind these 38 million tracks (nonetheless an unbelievable stat) that attracted ZERO streams in 2022?

And, by extension, the artists behind the 42% of tracks that attracted ten or fewer streams final 12 months?

No pay, no keep (unplay-ed).

As issues stand, Spotify can’t technically do that, at the very least instantly.

Its financial relationship with stated B2B clients (9 million artists and counting) can solely happen through middlemen, when it comes to distributors and document firms.

Crucial sector, volume-wise, of these middlemen? DIY distributors, whose self-uploading shoppers are accountable for almost all of latest music pushed onto streaming providers’ huge catalog (158 million tracks and counting).

If solely there was a method for Spotify to have a direct distribution relationship with artists, in order that it might ‘Do An Elon’ and begin billing stated acts, one-to-one, for important B2B providers.

Oh yeah, there may be: Spotify launched a direct DIY distribution product for artists in 2018, solely to shut it down in 2019 below strain from the key document firms.

Since then, the likes of SoundCloud and – amazingly, in current context – TikTok’s SoundOn have launched their very own DIY distribution choices for music artists.

4 years on from the final time Spotify deserted its personal music distribution operation, is it time for Daniel Ek and co. to have one other crack at this market?Music Enterprise Worldwide