Downtown Music Holdings now owns four music distributors. Who's next?

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                January 23, 2020

            Downtown Music Holdings now owns four music distributors. Who's next?

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http://hotpodnews.com/presents....
The fine print of innovation in the music business.
This is issue #75, published on January 23, 2020.
Happy Thursday!
Lots of trends to dig into this week. Some preliminary notes:

This newsletter now has over 6,000 subscribers!!! 🎉 🎉 Whether this is your first issue or you’ve been here since the beginning, thank you so, so much for helping to shape this community into what it’s become today. If you like what you’ve been reading, I would greatly appreciate if you shared the newsletter with a friend, family member or colleague who might be interested! Social links are at the bottom of this email.

I’ve updated my speaking calendar (cheriehu.com/speaking) for the next few months. I’ll be at by:Larm (https://bylarm.no/) in February, and at SXSW (https://www.sxsw.com/) and Treefort Music Fest (https://www.treefortmusicfest.com/) in March. If our paths will cross at any of these events please let me know!

ICYMI, I did a newsletter takeover last week with Dan Runcie’s Trapital newsletter about the concept of “fantasy sports for music.” You can read my take on the Trapital site (https://trapital.co/2020/01/16/so-you-want-to-be-a-music-mogul-the-future-of-fantasy-record-labels/) . Dan and I also recorded a fun episode of the Trapital podcast (https://trapital.co/2020/01/21/fantasy-record-labels-were-skeptical-a-trapital-water-music-collaboration-with-cherie-hu/) that dives deeper into both of our perspectives on the topic, which you can listen to on Apple Podcasts (https://podcasts.apple.com/us/podcast/trapital/id1470003061) , Spotify (https://open.spotify.com/show/50apKt6gDaI63p6J7vCypT?si=XZUsqyXJTDO0XFiOE-sIYA) , SoundCloud (https://soundcloud.com/user-476357640) , Stitcher (https://www.stitcher.com/podcast/trapital) , YouTube (https://www.youtube.com/channel/UC7l9HBFEdNdmRCZ-lpzvhMQ) and Overcast (https://overcast.fm/itunes1470003061/trapital) .
Downtown Music Holdings now owns four music distributors. Who’s next?

It’s a simultaneously difficult and opportune time to be a music distributor.
I’ve always been a bit skeptical about the digital-distribution business. Through a handful of articles last year (in Billboard (https://www.billboard.com/amp/articles/business/8507827/music-distribution-business-streaming-strategy) and in my own newsletter (https://us20.campaign-archive.com/?u=3d1b6946215346237ceeb999b&id=81f07b66df) ), I broke down how differentiation in the sector was becoming increasingly difficult, as its underlying mechanics were becoming more commodified, allowing practically anyone to enter the market and leaving players with little other choice but to compete on price.
This heated competition and market saturation has prompted some distributors to make dramatic changes in their business models. For instance, Stem kicked off (https://www.musicbusinessworldwide.com/having-raised-12-5m-stem-quits-diy-distribution-and-ups-its-fees-for-top-performing-artists/) the majority of its customer base to focus on more established artists, while UnitedMasters doubled its commission rate (https://unitedmasters.com/studio-terms) from 5% to 10% (and now charges a 20% commission on royalties from brand placements).
But beyond these business-model changes, there’s been even more momentum around mergers and acquisitions. In 2019 alone, SoundCloud acquired (https://www.billboard.com/articles/business/8512972/soundcloud-repost-network-acquisition-distribution-tools-services) Repost Network (https://www.repostnetwork.com/) to bolster its pivot to artist services; Downtown Music Holdings closed its acquisition of AVL Digital Group (https://www.avldigital.com/brand-menu#new-page) , the parent company of CD Baby, DashGo, AdRev and other distribution, marketing and monetization tools for indie artists; and music and audio distributor Zebralution (https://zebralution.com/en/) got bought (https://www.billboard.com/articles/business/8545370/gema-acquires-zebralution-distribution-firm) by a German performing rights organization (what?!).
A new announcement yesterday adds to this developing saga: Downtown-owned AVL Digital Group has acquired yet another distribution company named FUGA (https://fuga.com/) .
As pictured above, this gives Downtown a wide distribution net that’s unparalleled at any other music company, even at a major label.
Click here to continue reading. (https://www.patreon.com/posts/33390455)
Where is the Spotify of the ticketing industry?
This is the first of several articles I hope to write in 2020 about opportunities for innovation in the live music industry.
I’ve come to the realization that the ticketing industry desperately needs its own Spotify.
What exactly do I mean by this? While I don’t think Spotify “saved (http://freakonomics.com/podcast/spotify/) ” recorded music, the company undeniably brought in a new paradigm shift centered around data-driven curation, marketing and business transparency. I break down Spotify’s impact into four main categories:
* Opening up, and lowering the costs of, music distribution.
* Opening up, and lowering the costs of, music consumption.
* Automating and accelerating music discovery.
* Opening up global audience data and insights to all artists.
Now let’s take each of those bullet points, and reframe them as a persistent problem in the ticketing industry:
* Ticket distribution is largely locked up in the hands of only a few platforms (namely, Ticketmaster, owned by Live Nation, and AXS, owned by AEG).
* High fees on the primary market and price gouging on the secondary market often create an inaccessible and frustrating user experience for fans.
* Event discovery is frankly kind of shitty right now (and, according to Live Nation CEO Michael Rapino, nearly 40% of tickets (https://celebrityaccess.com/caarchive/rapino-talks-ticketing/) still go unsold).
* Artists often don’t own, or even have access to, data around who’s buying their tickets and coming to their shows — especially once those tickets start circulating on the secondary market.
Theoretically, this is the perfect environment for a Spotify-type startup to come in and address one or more of these problems through a superior, transparent and tech-forward product.
Indeed, entrepreneurship in the ticketing sector is alive and well: According to my own research (https://airtable.com/tblQyk29OR2N9xlNR/viwcgqlRVpKYFrZ5U?blocks=hide) , ~20 new ticketing startups have launched globally over the past three years, with the sector as a whole attracting more than $330 million in venture-capital funding in that time period. (Some notable funding rounds in 2019: $15M for Lyte (https://www.billboard.com/articles/business/8532565/ticketing-platform-lyte-15-million-series-a-financing) , $4.6M for Festicket (https://techcrunch.com/2019/02/05/festicket-the-festival-booking-platform-picks-up-4-6m-backing-from-creative-investor-edge-investments/) , $73M for TodayTix (https://techcrunch.com/2019/05/16/todaytix-great-hill-funding/) .)
But here’s a big caveat: Despite this sustained entrepreneurial activity, ticketing still remains twice as consolidated as recorded music. Ticketmaster owns an estimated 80% of its market — in contrast to the world’s biggest record label, Universal Music Group, which has around a 38% market share in its respective sector.
The consolidation of ticketing can make it difficult for new startups to break meaningful ground, because they can’t get ahold of the inventory required to have a functioning, valuable marketplace in the first place.
In my mind, this is why the ticketing industry hasn’t had its Spotify moment yet: The ultimate name of the ticketing game is more capital and more inventory, not necessarily better software.
Click here to continue reading. (https://www.patreon.com/posts/33397275)
A new taxonomy of the music-merch industry
I’ve written in the past about opportunities for innovation in the music merch sector — from making better use of native social features like Instagram Checkout (https://www.musicbusinessworldwide.com/instagrams-new-e-commerce-features-could-transform-music-marketing-but-only-if-the-record-industry-is-willing-to-change/) , to more openly embracing merch created and even sold by everyday fans (https://www.patreon.com/posts/28198547) instead of resorting to takedown requests. In general, my impression is that merch tends to be treated as an afterthought, or as a box towards the bottom of a marketing checklist for an artist’s album or tour, rather than as a standalone, direct-to-consumer retail operation in its own right.
For my own research, I wanted to get a better sense not just of opportunities for improvement in the music merch industry, but also of what the market looks like today in terms of its key players. There’s already been a lot of interesting writing and reporting on the market size of music merch at large, but virtually no central, comprehensive lists of companies and agencies dedicated to the sector.
So, I decided to make such a list myself. Using Airtable, I compiled a list of over 40 different music merch and e-commerce companies around the world — spanning independent agencies, open, self-serve platforms, closed, label-owned platforms and more.
Click here to access the database (members only). (https://www.patreon.com/posts/31746744)
Good reads
Are journalists listening to electronic music wrong? (First Floor) (https://firstfloor.substack.com/p/first-floor-19-are-journalists-listening?curator=MusicREDEF)
Interesting commentary from Shawn Reynaldo about the problem electronic music journalists face with reviewing albums that were made for a specific context — “at very high volumes, ideally on high-quality soundsystems, for large groups of people” — when all they have is a laptop and a pair of OK headphones.
If You Care About Rap, Don’t Release Your Album in a Museum (Pitchfork) (https://pitchfork.com/thepitch/if-you-care-about-rap-dont-release-your-album-in-a-museum/?curator=MusicREDEF)
Sheldon Pearce shares his perspective on the lackluster impact of Yasiin Bey’s exclusive album-exhibition at the Brooklyn Museum — which, for the record, I also attended and did not really enjoy — and the inherent conflict in trying to build new art institutions with rap at the center. In Pearce’s words: “Hip-hop can tag the wall outside and still be art.”
CCTV’s dysfunctional music licensing department (Twitter) (https://twitter.com/kerrymuzzey/status/1215314012499394560)
Eye-opening thread from music composer Kerry Muzzey about how he found out a lot of his music was being used in TV shows on Chinese television network CCTV without the proper permission or compensation, and how trying to make things right with the local collection society (Music Copyright Society of China, or MCSC) over the past several months hasn’t helped.
Podcast Groups Aren’t Just About Podcasts (New York Times) (https://www.nytimes.com/2020/01/15/style/podcast-facebook-groups.html)
Taylor Lorenz dives into the dynamics of podcast fan groups on Facebook. The biggest takeaway for me is that there’s an opportunity for emerging podcast platforms to host the community-building themselves, instead of outsourcing the work to incumbent social-media sites. (This piece also features commentary from Hot Pod’s own Nick Quah!)
What I’m listening to
I’m writing an article about the economics of 24/7 lo-fi “beats to relax/study to (https://www.youtube.com/watch?v=hHW1oY26kxQ) ” livestreams on YouTube, so am now deep in the world of beat tapes and instrumental hip-hop in general.
A few dope producers you should check out:
* Elaquent (https://open.spotify.com/artist/14rl122F3uMCloqdEVV9WL?si=UNNAt_59Si-IyTQ-GjnhQA) (listen to “Guidelines (https://open.spotify.com/track/10kFUu0fsEalcs8WxgTNNK?si=JkkB90Y6SYS1eV1XxbaxXQ) ,” ft. Oddisee)
* Dibia$E (https://open.spotify.com/artist/21H0kHbS41lECHguMnjGpb?si=Cx8EE6DcST6PgkyG5D0zFw) (listen to Bonus Levels (https://open.spotify.com/album/0lflz0LLYNZVL54fXfNycl?si=FbjBrfqeTSagBaKTJPGViw) )
* Birocratic (https://open.spotify.com/artist/60b7IDlGflg5lgyfEGf9yB?si=vSlyYJH4TtOIVpAj6u7sbg) (listen to Beets 4 (https://open.spotify.com/album/0BYFg5LjHvQZomF666Kaa2?si=TDmcqRBbS8C6LszT9LKQiw) )
Beyond beat tapes, I’m also loving “Shades of You (https://open.spotify.com/track/2OtnmFipsJgxUPkwnMP11I?si=rrxt5GdGR0SBuCsxw0Vh2Q) ” — the latest single from Moses Boyd, featuring Poppy Ajudha.
If you’d like to support even more thoughts and conversations on music and tech, I encourage you to become a paying member of the Water & Music ecosystem on Patreon (http://patreon.com/cheriehu?utm_campaign=Water%20%26%20Music&utm_medium=email&utm_source=Revue%20newsletter) .
For as little as $3/month or as much as $200+/month, you can access a wide range of perks including:
* A closed, members-only Discord server, consisting of regular updates and analysis on the most important music and tech news
* Exclusive essays and article previews
* Updates on my book research
* Monthly video hangouts with me
…and much more! Thanks so much for reading! ❤️
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