I.B. BAD'S NEW-MATH PRIMER

Apple Music’s launch 11 months ago, Spotify’s accelerated gain of paid subscribers and the noisy, ill-conceived launch on the part of Tidal’s multimillionaire artist co-owners have combined to trigger the all-boats-will-rise scenario, driving streaming to the very center of the industry’s mindset. Not only is streaming becoming the economic force that’s driving dollars to the once-beleaguered rights holders, it’s also enabling millions of fans to discover music on a scale that wasn’t previously possible, enabling them to access new or unfamiliar music more easily than ever before. Listeners no longer have to commit to buying, so when a teenager or boomer wanted to hear David Bowie or Prince following their deaths earlier this year, they merely had to go to Spotify, Apple Music or, in Prince’s case, Tidal—where they’d already paid their monthly $9.99 bill—to access all the music they ever wanted.

After tripping up multiple times during its first year of existence, Jay Z’s Tidal is becoming a destination for urban music, having put it all together for Beyoncé while being in the right place at the right time when Prince passed. Many believe that Tidal’s growth slowed that of Apple Music in that urban consumers had been the primary target audience for Jimmy Iovine throughout his years at Interscope, a strategy that was magnified with Beats in its assimilation of urban music and sports stars into mainstream pop culture. Apple countered by signing Drake to a $19m deal. So why hasn’t Apple bought Tidal and stopped the bleeding, with the burn rate on Jay Z’s service at $10m a year?

This is a highly competitive field, with each of the biggest players constantly looking for an edge, and Spotify is believed to be gearing up to take a run at Apple Music and Tidal with its own artist exclusives and created content, which have become key parts of the strategies of the two premium services.

The greatest impact from streaming has been on the artists who have been dominating the sector, the value of their brands having grown exponentially as more and more listeners have become fans because of the ease of access. As a result, it’s become essential to look at sales plus streaming (SPS) in order to get a full understanding of which artists are most important in the new musical ecosystem. Streaming really tells the same story as single sales once did—and still do to a certain extent—but in a more magnified way.
Tracks that sell reasonably well and show up on streaming charts but don’t have the smash hit that redefines their prominence in the new ecosystem are exposed for what they are—non-dial-movers. The chart on the opposite page listing the year’s Top 30 streaming artists provides some specificity to the preceding statement. In essence, in order to become a superstar act like Drake or Justin Bieber, all the boxes of sales, both singles and albums, need to be checked off, but just as importantly, the streams need to keep blowing out. Rihanna, who has had some of the year’s top-selling singles as well as gigantic streaming numbers, nonetheless blew it by botching her album launch, whereas Adele used mammoth streaming for her singles to sell three times as many records as anyone else during the last decade.

Sales plus steaming (SPS) has become the clearest way to look at what’s hot and what’s not, and if you don’t know how to analyze these numbers, you will be at a loss to understand music’s place in pop culture today. How many 13- to 25-year- olds do you know who take their music cues from traditional media—specifically radio and TV? Millennials have grown up not so much listening as searching, due in large part to YouTube, and the streaming services are now serving up this seeming infinity of choices in a more elegant and appealing manner.

Streaming is also revolutionizing the distribution of music in that artists no longer need a middle man to get their music to the marketplace. Case in point: unsigned artist Chance the Rapper’s streaming-only Apple Music exclusive. Does this unprecedented case of artist empowerment portend the future?

The lack of huge checks from the rights holders and the massive monies being earned elsewhere have recalibrated the balance of power toward the major artists, and the rights holders are still in the process of adjusting to this new reality. Rihanna, Kanye West, Beyoncé, Adele, Taylor Swift, U2, Lil Wayne and others are now calling the shots and controlling the narrative, prioritizing their brands over what’s prudent for the rights holders, who thus far don’t appear to be pushing back with much forcefulness. That’s in part because the streaming income pouring into the rights holders’ coffers looks like it’s beginning to right the ships. If the rights holders can figure out how to fix unlimited ad-supported free streaming and YouTube, the dollars could become sizable again. How will Swift, Lady Gaga, Bruno Mars, Pink, Eminem, Justin Timberlake, U2, Maroon 5, Kendrick Lamar, Jay Z, Future, Sam Smith, Katy Perry, Lil Wayne, Nicki Minaj, Pentatonix and red-hot newcomer G-Eazy push the envelope with their next projects, further redefining how music is distributed and monetized?

Our numbers crunchers have tabulated rankings of the most-streamed artists of the first five months of 2016, led by Drake, the Godzilla of streaming, who’s racked up a mind-boggling 1.44 billion streams year-to-date. The chart reveals that UMG is dominating streaming at this stage much as it has dominated traditional marketshare in recent years, even as Sony Music rides a hot streak in singles sales and airplay; at presstime, seven of the Top 10 songs at iTunes were from Sony acts. A second chart lists the top labels in streaming marketshare, which finds Monte Lipman’s Republic (#2 in TEA and frontline share) forging ahead of the field, with Rob Stringer’s Columbia, the marketshare leader in TEA and frontline, its closest rival. The streaming shares of Island, Cash Money and Big Machine feed into Republic’s streaming marketshare, while Columbia gets RED’s share.