Specialist
Former Commercial Director at Universal Music Group Sweden AB (Universal Music Group Inc)
Agenda
- Streaming revenue growth outlook for Universal Music, including record label monetisation on non-streaming platforms such as Facebook (NASDAQ: FB), TikTok and Snapchat (NYSE: SNAP)
- Artist-label relationship, deal structures and split between catalogue and frontline music – evolution and economics
- Spotify (NYSE: SPOT) – Discovery tool adoption drivers plus streaming platforms-record label relationship evolution and marketing budget share
- Catalogue purchasing, focusing on rights and royalty streams
Questions
1.
Where will growth for record labels come from? Is there a distinction for these businesses between publishing and recording music?
2.
How do record labels such as UMG [Universal Music Group] monetise on non-streaming applications you mentioned such as Facebook, TikTok and Snapchat?
3.
Do you expect record labels’ monetisation on non-streaming platforms to play out as a royalty rate agreed between Facebook and UMG or any of the major players? You mentioned per-stream and per-performance approaches.
4.
How would major record labels demonstrate value creation for Facebook? You mentioned music companies are talking about driving 25% of non-streaming platforms’ value.
5.
Is monetisation on non-streaming platforms still based around a royalty rate?
6.
There’s a lot of news around artists falling out with their record labels. Do you think this is a negative trend for record labels and could impact their margin expansion, given they may have to pay more revenue out to artists?
7.
What’s the typical artist royalty rate with a record label?
8.
How do you expect deal structures to evolve between artists and labels? What types of deals are artists increasingly opting for given the range of options available? I assume the majority of the catalogue is master or artist deal-based.
9.
Why do you think deal structure and the mix of deal structures is irrelevant? It seems it would be significant in determining royalty cost and thus labels’ profitability.
10.
How do you expect the split to evolve between catalogue and frontline music? UMG reported in its prospectus that 54% of consumption was catalogue and 46% was frontline in 2020. Do you think consumption could shift more towards frontline?
11.
How could profitability be impacted as frontline content moves into catalogue at a higher royalty cost or with artists having a higher negotiated royalty rate?
12.
What are record labels such as UMG specifically buying in catalogue purchases? What rights and royalty streams are they acquiring?
13.
How could the relationship evolve between big streaming companies such as Spotify and record labels?
14.
Do you think that Spotify will be able to leverage its non-music share of consumption – if and as it scales it – in negotiations to walk the rate down, even if it’s only 100bps every renewal cycle?
15.
What are your thoughts on Spotify’s Discovery tool? Could it be used to lower the royalty or headline rate that record labels receive?
16.
What budget share do you think Spotify captures of labels’ marketing spending?
17.
Would you say Spotify provides an uncompetitive ROI on ad spend?
18.
How much could Spotify Discovery’s prevailing rate be discounted if the product gains buy-in and support from record labels? There’s an experiment in what the appropriate rate would be.
19.
Could the Discovery tool play into the record labels’ desire to grow their market share relative to each other? Spotify is suggesting that Discovery mode could apply to a significant share of the platform’s total music consumption, given the proportion of passive consumption within this. Could that be a way to grow market share?
