#TheWeeklyRoundUp - 03.02.23

DIY and non major/Merlin music now accounts for a quarter of Spotify streams (music ally)

Yesterday the company’s 20-F annual report form was filed with US regulator the SEC, going into more granular detail about its business.

Here’s one nugget from the filing: music licensed to Spotify by the three major labels and indie licensing agency Merlin accounted for around 75% of Spotify streams in 2022. We wondered how that has changed over time, so we went back to past filings to find out.

What we found was that this percentage has been falling steadily. In 2017 the majors and Merlin accounted for 87% of Spotify’s total streams, but that proportion fell to 85% in 2018; 82% in 2019; 78% in 2020; 77% in 2021 and now 75% in 2022.

This trend isn’t a surprise: we know that the sector of DIY artists working through distributors has been growing. It’s just useful to have it quantified from a big DSP.

Last year, Midia Research estimated that self-releasing ‘artists direct’ saw their recorded music revenues grow by 25% to $1.5bn in 2021, with the increase in streaming share a key factor in that trend.

Here’s a caveat: independent labels who do not distribute through Merlin will be included in the 25% of non-major/Merlin streams on Spotify, so it’s not just DIY artists. We’ve changed our headline to reflect this since publication.

What else did we learn from Spotify’s 20-F filing? The company reached €34bn of lifetime payments to music rightsholders by the end of 2022, up from €26bn at the end of 2021.

That €8bn was thus around 68% of Spotify’s €11.73bn of annual revenues last year, with the caveat that the payouts figure is rounded. “In 2022, our expenses for rights holders grew by 21% compared to the prior year,” noted Spotify.

Another stat from the filing: Spotify listeners streamed 132bn hours of content in 2022, up 20% year-on-year, which matched its growth in monthly active users.

There is also some more context for Spotify’s recent round of layoffs, and CEO Daniel Ek’s admission that the company had “got a little carried away and overinvested relative to the uncertainty we saw shaping up in the market”.

The filing reveals that Spotify grew from 6,617 employees at the end of 2021 to 8,359 at the end of 2022. The company thus grew its headcount by 26.3% in 2022, before laying off 6% in January.

In the breakdown of costs across the different parts of its business, it outlines “an increase in personnel-related costs” of €316m in its R&D segment; a further €141m such increase within sales and marketing; and €104m of personnel-related costs filed under general and administrative costs.

The filing also reiterates that Spotify expects to incur between €35m and €45m of severance-related charges relating to the recent layoffs.

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Gloria Bosman joins Samro board of directors (IOL) Two-time South African Music Awards winner Gloria Bosman is the newest member to join the Southern African Music Rights Organisation (Samro) board of directors. Samro recently announced the appointment shortly after the news that Annabell Lebethe was appointed the new CEO. The organisation wants to reiterate the agenda of greater female inclusion. The statement released said: “Samro is pleased to announce the appointment of another female member to its board of directors, as it continues to strive for greater female inclusion – not only within the organisation itself, but across the entire music industry.” Bosman is a jazz, African, rock and gospel vocalist and also an accomplished producer, composer, vocal and presenter. To date, she has six albums to her credit under her own name as a solo artist and has performed across the globe in countries such as the UK, France, Finland, Australia, Nigeria, Namibia and Zimbabwe, as well as completing a three-country tour in South America. Samro chairperson Nicholas Maweni said Bosman was voted in to make key decisions. “Multiple-award winner and virtuoso in music Gloria Bosman was voted in by members to help make key decisions and steer important initiatives on behalf of the organisation. “The executive management of Samro is pleased that it has made exemplary progress appointing women in the organisation’s leadership, with about 65% of all employees at Samro and 71% of senior management being women.

“Based on Samro’s memorandum of incorporation, members get an annual opportunity to rotate a third of the board by voting in new composers and publishers as directors who oversee the activities of management, with a particular focus on governance and strategy.”