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

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

After I say ‘us’ btw, I don’t imply ‘me’; my private causes for fleeing the bully-bird’s cage had been loads, however can primarily 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 recreation. If I’m to spike my night cortisol with interactive nonsense, I’d quite accomplish that taking part in PlayStation;
• (ii) In the end, I put meals on the desk for my youngsters with phrases, and I didn’t wish to habitually piddle these phrases away to complement gazillionaire Silicon Valley bros (Jack, Elon)… for nothing.

So after I say ‘us’, I imply ‘us’.

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

You’ll 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 exchange it… for a tidy sum.

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

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

Guess how one reinstates cellular 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 keen to threat being hacked and unmentionables being tweeted out in your title? If not, pay up.”

So, begrudgingly, we’ve needed to.

There’s a wider enterprise lesson to be realized right here: Elon Musk’s stone-hearted resolution to start out promoting a vital service profit that we’ve lengthy grown accustomed to having totally free.

That concept, in flip, has delivered to thoughts the Good Ship Spotify, and a captivating slide from one specific 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 generally known as MRC Information and Nielsen Music. (You’ll be able to take heed to Jonas’s full SXSW presentation by way of right here.)

The related slide inside Jonas’s presso is the one you may see above, primarily based on Luminate knowledge. It delivers some jaw-dropping info.

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

That 67.1 million determine represents slightly below half (42%) of your complete catalog of tracks accessible on worldwide music streaming companies as you learn this (primarily based on IRSCs).

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

Put together your self for the following statistical haymaker: Practically 1 / 4 (24%) of the 158 million tracks on music streaming companies 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 paintings of any of those songs, on any streaming service, wherever, at any time, within the entirety of the one year of 2022.

It’s nearly 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 in regards to the sum of money Spotify pays Google every year to be used of its cloud storage amenities.

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 companies and extra software program license charges’.

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

To repeat that: The beneath chart represents the minimal quantity Spotify is spending on these companies every year. 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 every year for cloud internet hosting companies, 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 trade.

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 accessible in its library?

Particularly if it began instantly billing, below risk of takedown, the hundreds of 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, no less than instantly.

Its financial relationship with stated B2B clients (9 million artists and counting) can solely happen through middlemen, by way of distributors and file firms.

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

If solely there was a manner 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 companies.

Oh yeah, there’s: Spotify launched a direct DIY distribution product for artists in 2018, solely to shut it down in 2019 below strain from the main file firms.

Since then, the likes of SoundCloud and – amazingly, in latest 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