Lessons in business of music during Covid-19 scourge era

Figures released recently in IFPI’s Global Music Report 2020 show total revenues for 2019 were Sh2 trillion. FILE PHOTO | NMG 

By RUFUS MWANYASI
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Summary

• Today’s article is a follow up to last week’s piece, which touched on the movie industry and will cover the music industry.
• Just for highlights; the global recorded music market grew by 8.2 per cent in 2019, the fifth consecutive year of good performance.
• Figures released recently in IFPI’s Global Music Report 2020 show total revenues for 2019 were Sh2 trillion.
• For the first time, streaming revenue accounted for more than half (56 per cent) of global revenue, driven by a 24.1 per cent increase in paid subscription streaming.

Today’s article is a follow up to last week’s piece, which touched on the movie industry and will cover the music industry.

Just for highlights; the global recorded music market grew by 8.2 per cent in 2019, the fifth consecutive year of good performance.

Figures released recently in IFPI’s Global Music Report 2020 show total revenues for 2019 were Sh2 trillion. For the first time, streaming revenue accounted for more than half (56 per cent) of global revenue, driven by a 24.1 per cent increase in paid subscription streaming.

There were 341 million users of paid streaming services at the end of 2019 accounting for 42 per cent of total recorded music revenue. Notice: movie streaming also accounted for nearly half of the global theatrical entertainment revenues last year.

More highlights; Hipgnosis (the first pure-play and public music publisher) also recently released its first full year results since listing on the London Stock Exchange.

From its total catalogue of 13,291 songs valued at Sh100 billion, Hipgnosis generated Sh8.6 billion last fiscal year, which is an equivalent of roughly 8.6 per cent yield (It's now the 58th biggest yielder on the FTSE 250 index) or an average of Sh650,000 per song.

The fund recently acquired 50 per cent of copyright interest of Wu-Tang Clan's primary producer; Robert “RZA” Diggs, - a catalogue comprising 814 songs.

Last year, it bought catalogs from Timbaland, The Dream and Poo Bear among others major acts. It now boasts ownership of four out of the top five Billboard Songs of the decade.

That said, the Covid-19 pandemic is having significant effects on the music segment as artistes have now found themselves without commercial outlets for their work. Perhaps, this could be a good time to reflect on the industry and its success.

Besides the usual takeaways; streaming is the future, music is now a proper asset class (as demonstrated by the Hipgnosis fund success) and continued relevance of the majors (read: Warner, Universal and BMG), there are other critical (albeit nuanced) points for consideration. African artistes who dream of fully emerging on the global music scene will need the following:

One; artistes will need to be more business-like. As Nile Rodgers (of the Chic fame) puts it; every song should have its own profit and loss statement and every song treated as its own independent business.

Put differently; artistes (and their support systems) will need to research and analyse data, look at brand opportunities, work out the right traditional and digital marketing strategies and, crucially, look at the global picture.

Thankfully, today’s world offers the local songster a way to build a career around the world.

Two; culture is key. A good example is the emergence of the Latino Music and its close relation to culture.

According to Sony Music Entertainment, authenticity of Latin artistes is a huge contributing factor to the global popularity of sounds coming from the region. Staying true to their roots and faithful to their culture is the reason for the success.

It's no wonder therefore that the region recorded the highest rate of growth globally, increasing by 18.9 per cent, and its digital accounting for almost three quarters of the market, reaching a share of 74.6 per cent in 2019.

Lastly, the policy environment must support and empower artistes. Those who invest in them must also reflect the modern, future-focused recording industry. Before launching globally, priority should be to first build the local ecosystem.

Mr Mwanyasi is the managing director of Canaan Capital