By Amber Horsburgh, Cherie Hu, Joshua Coase
July 2019
Mary Meeker’s 2019 Internet Trends Report For The Music Business
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Mary Meeker’s annual Internet Trends report, now in its 24th year, has grown to become the de facto bible for Silicon Valley.
The report by the investment veteran and former KPCB general partner tracks the most important global shifts across areas including but not limited to mobile, e-commerce, advertising, streaming and gaming -- all of which will play crucial roles in where the music industry is headed over the next five to ten years.
We’ve gone through all 333 of Meeker’s slides so you don’t have to -- summarizing how her insights parallel the latest trends and innovations in the music business, and, most importantly, what opportunities they reveal for artists with respect to marketing and creative strategy.
Hope you enjoy our roundup, and please reach out with any questions or feedback! :)
About the authors
LA-based marketing consultant helping managers/abels build creative, data-driven release campaigns. She is the former SVP of Strategy at Downtown Records (Miike Snow, Cold War Kids, Mura Masa, Chet Faker/Nick Murphy, Smino) and Big Spaceship alumni (YouTube Music, Google Play, Samsung and Sonos). She writes about music strategy in her fortnightly newsletter, Deep Cuts.
Freelance journalist focusing on how technology is transforming music and entertainment. She runs Water & Music, an independent newsletter, podcast and online membership community dedicated to big ideas in music and tech, and has also written for several publications including Billboard, Forbes, Music Business Worldwide and Pitchfork. You can follow her on Twitter.
Freelance music journalist from the UK who has written for various publications including Majestic Casual’s editorial website ‘Majestic Journal’ and popular Belgian music blog High Clouds. Also has experience in artist management and PR and writes several exclusive pieces for his own music journalism website, Coase Media.
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Asia-Pacific
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Internet usage
Not only does Asia-Pacific comprise the majority of global Internet users — they also have one of the largest growth opportunities for Internet adoption, second only to MENA markets.
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Music market
This aligns with the IFPI’s findings that Asia and Australasia comprised the second largest global region for recorded-music revenue in 2018 — posting 11.7% overall growth and 29.5% growth in paid audio streaming year-over-year.
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China & India
In 2018, China and India ranked in the top two for number of Internet users, but only 7th and 15th for recorded music revenues, respectively (source: IFPI).
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Streaming drives global growth, with a catch
China has around 33M paid subscribers, out of a population of 1.4B — a small but surging conversion rate of under 2 percent (source: IFPI).
India’s streaming market totals an estimated US$80M in revenue from around 150M to 180M total streaming consumers, suggesting that conversion to paid subscriptions remains a similarly uphill battle (source: The Hindu Business Line).
Crowded local ecosystems -- Tencent, NetEase, Alibaba and ByteDance in China, plus Saavn, Hungama and Gaana in India -- create a healthy amount of competition for international players like Spotify that are trying to break into these markets, while surfacing local repertoire.
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“If you look at the evolution of digital music markets in Asia, the majority started with a high proportion of international repertoire. That was because early adopters tended to be urban, highly educated, well-travelled English speakers. As streaming finds a broader audience, there is more interest in domestic music. We’re trying to help meet that demand by investing heavily in local artists and repertoire.”
Simon Robson
President, Asia Warner Music (IFPI)
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As streaming is adopted in countries with high Internet penetration rates, we’ll see greater interest in local artists, giving rise to new territories that can break artists beyond the US and UK.
Cities in South/Southeast Asia and Latin America tend to engage with emerging artists much earlier and more rapidly compared to other markets (source: Chartmetric).
Opportunity for artists
More interest in domestic artists with global appeal
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Case study: Rich Brian
Formerly known as Rich Chigga, Brian Immanuel AKA Rich Brian was born and raised in Jakarta, Indonesia, and learned to speak and rap in English by watching YouTube videos. Inspired by the likes of Childish Gambino, Drake and Kanye West, he started creating clips on his Vine account, where he received hundreds of thousands of loops starting in 2013.
Brian first went viral with his 2016 release “Dat $tick” -- largely thanks to his music video and accompanying reaction video featuring rappers 21 Savage, Tory Lanez, Desiigner and Ghostface Killah, who recorded a verse in an official remix. The track has over 111 million streams on Spotify.
2017 marked Brian’s breakout year after embarking on his first US headline tour and releasing the track “Gospel” with XXXTentacion, which also has over 100 million Spotify streams. His debut album Amen, released in February 2018, made him the first-ever Asian artist to top the iTunes hip-hop charts.
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Case study: Danny Ocean
Daniel Morales, AKA Danny Ocean became an overnight star in Latin America and beyond following his single “Me Rehuso” going viral.
Born and raised in Venezuela, the singer took the difficult decision to leave the country amidst political turmoil in 2015, joining family members in Miami. This move inspired his hit single after leaving his girlfriend behind.
Recorded and released in 2016 on YouTube, the track debuted at number 41 on Billboard’s Latin Airplay Chart and went on to break the record for becoming the Latin song with the most weeks on Spotify’s Top 50 Global Chart, surpassing “Despacito”.
“Me Rehuso” now has over 830 million streams on Spotify, with its success helping Ocean land a major-label deal with Warner Music Group in a joint partnership between Atlantic Records and Warner Music Latin.
Mobile
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Mobile dominates usage
Mobile usage grew 9% year-over-year in 2018, whereas that of desktop and connected devices fell.
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Mobile in China
Mobile short-form video content emerges as the second-largest draw for screen time in China.
Users in the country spend over 600 million hours daily watching short-form videos on mobile devices.
A survey carried out by PHD Media China reported that 62% of marketers created short-form video content in 2018 — a nearly threefold increase in share from 22% in 2017.
As of January 2019, “Douyin/TikTok users spend an average of 52 minutes per day on the platform.
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88% of TV viewers use a second device
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Opportunity for artists
Build content & distribution strategies that facilitate discovery on mobile.
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Case study: 5 Seconds of Summer
The band posted childhood photos with their upcoming album title “Youngblood” signature on top as part of promoting a flash sale. Fans placed themselves within the artwork using childhood photos, creating visibility across social media.
Youngblood the album held the #1 position on U.S. Radio for five consecutive weeks.
Content
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Visual formats reign supreme
1 billion images were shared on Instagram in 2018.
>50% of Tweet impressions were from images, videos and other visual media.
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YouTube & IG usage grew 5% and 4%
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Short-form video is crucial for the spread of music.
Implication for artists
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Blanco Brown’s single “The Git Up” blew up on TikTok thanks to #thegitupchallenge where users posted dance routines to the track. Prior to this, Brown’s tracks had a few hundred thousand streams on Spotify. Over 1.2 million TikTok users did #thegitupchallenge.
Largely as a result of the track trending on TikTok, “The Git Up” has now been streamed nearly 10 million times on Spotify.
Case study: Blanco Brown
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Ongoing innovation in VR/AR/MR music campaigns
E-Commerce
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E-Comm was 15% of retail sales
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59% of everyday transactions were digital
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Social commerce raises revenue potential
TikTok
Any user who creates more than 10 videos on Douyan (TikTok) can now create a Douyin Store to sell their products.
Instagram introduced Checkout in closed beta for US businesses in March 2019. Music, merch and ticket capabilities are expected to be added soon.
Facebook’s Eventbrite and Ticketmaster integrations means fans can buy tickets directly on-platform, no longer having to go to third-party sites.
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Technology advancements in social commerce present an opportunity for artists to monetize their social following.
Buy buttons, mobile messenger apps and mobile transactions give artists ways to sell tickets, merch and physical product.
An artist’s e-commerce business can be built as an ecosystem that leverages social capital and partnerships, rather than a one-channel strategy through a single D2C website.
Implication for artists
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Case study: 45 East
Portland nightclub 45 East used Facebook to generate sales for its shows. In 2018 33% of ticket sales were through Facebook Events pages.
This saved ~7 hours per week on marketing vs. traditional promotional methods, i.e.: creating and distributing flyers and posters.
(source: Eventbrite)
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New music e-commerce solutions
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Watch out: Merch bundles
While merch bundles are proven and effective ways to combine and cross-reference fan data and behavior across both physical and digital sources, their inclusion in official charts (Billboard) make them susceptible to manipulation at the expense of greater care around the actual fan experience (e.g. DJ Khaled vs. Tyler, The Creator).
Data
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Implications for artists
We’re drinking from the proverbial data hose, and music is the water.
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Case study: Fangage
Founded by electronic DJ/producer Sam Feldt, Fangage explicitly positions data as a direct value exchange between fans and artists, in which fans can choose to give their email, phone number and other social data in exchange for access to exclusive content, merch and experiences.
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Other areas to watch
Advertising & Media
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Mobile dominates U.S. ad spend
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Google & Facebook dominate digital ad $$
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Digital marketing managers need to find alternative ways to reach audiences and cut through in less competitive environments:
Simply buying Facebook or Instagram ads will become both more competitive and more expensive. This will drive up the price of ad space and lower the efficiency with which artists can reach and connect with their audiences.
Implication for artists
Streaming
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The IFPI reported an overall year-over-year growth in recorded music revenues of 9.7% in 2018. This was driven predominantly by the 32.9% growth in paid streaming, accounting for 37% of total revenue.
Companies are still competing for paid subscribers, and Apple Music is becoming an increasingly dominant player, having just surpassed 60M subscribers in June 2019.
Spotify is still the market leader, with ~60% of its paid subscribers coming from its free tier.
Paid subscriptions grow -- and become more competitive
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Opportunities for artists
In streaming services’ race to the top, artists can hold the power.
Access to exclusive content is the third highest driver of new trials of streaming services. This is a powerful bargaining chip if you’re an artist who can use DSP support around a release to bring a large quantity of fans to that platform.
If you’re managing or representing an artist on the label side, you should be thinking about the CAC (customer acquisition cost) and LTV (lifetime value) of the consumers you’re bringing to their service through exclusive content deals.
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Case study: Billie Eilish
For her album WHEN WE ALL FALL ASLEEP, WHERE DO WE GO?, Billie Eilish secured bespoke content and commercial partnerships with nearly every major streaming service:
The Spotify and Apple Music partnerships in particular reveal the power of physical retail experiences in drawing attention to, and telling the story around, recorded music.
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Case study: Beyoncé
Beyonce’s multimedia project Lemonade used to be exclusive on Tidal, but she released the album onto Spotify and Apple Music in April 2019 -- in tandem with her securing a $60M deal with Netflix and releasing a live album of her concert film Homecoming.
Takeaway: When it comes to storytelling and branding, on-demand video services can be even more powerful allies than music-first services.
Gaming
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Twitch viewing time doubled
Every day on Twitch, 15 million daily active users consume over 25 million hours of content.
62.87% of Twitch activity occurs in English.
21.3% of Twitch.tv viewers come from the US.
eSports makes up for 21.3% of all Twitch viewing.
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Fortnite popularity still rising
The game has attracted over 250 million active players, nearly a threefold increase in the past 18 months.
Fortnite was the most popular game streamed on Twitch in 2018, with over 1.4 million peak concurrent views.
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“It is really important for us to have a level playing field for these services that we don’t yet have licences [for], such as music used in the massive multiplayer online gaming market, like Fortnite. That is one of the areas we will be looking at. Does that fall within the new provisions of the law? Is that an opportunity [for licensing revenues]? [The new law] clarifies the liability of key technology platforms to pay for their use of copyright material.”
Robert Ashcroft
Chief Executive, PRS for Music
Online gaming could become a source of music royalty revenue for the first time
According to a report from The Guardian, the new European copyright directive passed in March 2019 could pave the way for PRS to collect song royalties from Fortnite.
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Twitch and Fortnite have opened up a new world for music marketing.
Implication for artists
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Case study: Ninja
Also known as Tyler Blevins, Ninja broke Twitch’s record for most concurrent viewers with his live stream playing Fortnite against Drake. Around 628,000 users tuned in, smashing the previous record of 388,000.
Ninja later released the branded compilation Ninjawerks through the record label Astralwerks (pictured right), suggesting that music will also become a viable long-term revenue stream for gaming influencers, not just a brand partnership opportunity.
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Case study: Fortnite
Marshmello’s inaugural concert inside Fortnite was viewed by over 10.7 million people concurrently at its peak.
In a world where VR/AR concerts are still getting limited reach and fan engagement, open-world online video games have emerged as the top contenders for virtual, “at-home” concert experiences.
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Esports as A&R: Specialist labels
Thank you. :)