Despite COVID-19’s grip over society, the concepts of cultural globalisation and digital connectivity remain in motion as record labels, music publishers, distributors and artist service companies continue to explore new territories. Ben Gilbert takes a look at the array of business deals struck this year.
Frustration, inaction and inertia might be considered fitting buzzwords to describe some components of the music industry during 2021. This was, after all, a period when COVID-19 evolved and consolidated its grip over global society, refusing to relinquish this debilitating stranglehold despite the welcome salvation of multiple vaccines. The live music scene, for example, still seems very far removed from pre-pandemic times, with the persistent threat of new lockdowns or increasingly prohibitive curbs posing a disabling threat to most performers, venues and tours.
But that has not stopped the cogs of business from turning, with the concepts of cultural globalisation and digital connectivity resolutely still in motion despite the evident restrictions around international travel. Ambition endures and the entertainment industries demand progress, as was emphasised by figures released by the International Federation of the Phonographic Industry (IFPI) in their 2021 Global Music Report.
Last year, when COVID-19 first emerged, revenues from recorded music grew by almost 7.5% to $21.6b. In recent years, streaming has liberated this ecosystem, building an international network that reaches into all corners of the globe, areas that record labels, music publishers, distributors and artist service companies continue to explore. Whether in-person or via flaky Zoom calls, conversations around meeting this expanding demand for music are remapping the geographic borders that many of us grew up with.
“Today’s music business is different…Suddenly population size matters”
“The traditional recorded music business was all about selling units, which naturally meant that the most important markets were not the most populous but the wealthiest. Throughout the late 20th century this created a ‘global’ market that was dominated by North America, Europe and a few others. This is why (among other political reasons) Japan became the biggest Asian music market, rather than China,” explained MIDiA on their Music Industry Blog.
“Today’s music business is different. Streaming…can monetise large-scale audiences in lower per-capita GDP markets. Suddenly population size matters, and emerging markets become the world’s largest addressable music audience,” stated the post. MIDiA predict there will be: “Fewer Anglo global superstars. A rise in non-Anglo superstars. The rise of regional superstars. The rise of local scenes and domestic artists.” But what is the tangible evidence that suggests Western industry leaders are actively exploiting this trend? The business of striking deals.
Within Europe, Russia was recently proclaimed the continent’s “fastest growing market”. Warner Music have shown clear intent here, launching Atlantic Records Russia in March, following the acquisition of local independent label Zhara Music, and ADA Russia in July. Cited as 2020’s 16th biggest recorded music market globally, approximately 85% of revenues come from streaming. While Western rap is seen as a key influence on the domestic music scene, culturally specific themes also hold sway. “It’s not simply an echo of the US hip-hop sound, but also draws its roots from a folk tradition called Chastushka, which saw two artists perform poems – with a strong satirical element – over upbeat music,” explained a piece in Music Ally.
Warner and Universal making further strategic moves into India
Looking further afield, Warner have made further strategic moves into India, a region described as “The New Superpower In Global Music” in a 2019 Synchtank feature. At the start of the year, Warner signed a distribution agreement with Sky Digital India. They aggregate Punjabi music from 42 Indian labels and an array of YouTube channels with an estimated audience of more than 15m subscribers. Meanwhile, Warner Music India also recently announced the launch of Maati, a new label designed to “provide a national platform for Indian folk music, its purest forms and its artists”, according to MD Jay Mehta.
Capturing the culturally specific nuances again remains key in an approach mirrored by Universal’s tactical decisions. This year, the company launched a trio of sub-labels – VYRL Haryanvi, VYRL Bhojpuri and VYRL Punjabi – to bolster VYRL Originals, their Indian non-film music label founded in 2018. But a global imperative is also paramount. Ostensibly more artist-specific, Universal’s comparative strategy has also seen a couple of initiatives driven by established artists.
In the summer, Canadian-Indian rapper and producer Tesher, who has sold more than 200m records globally and runs the 12th biggest TikTok channel in the world, inked a deal to record a new cover of his smash hit Jalebi Baby with Jason Derulo. Universal also struck an exclusive global agreement with Indian music superstar Badshah. According to the label, this will see him collaborate “with some of the world’s most influential and popular artists”. Given that Badshah is the only Indian pop performer in history to release 15 different songs with more than 200m views on YouTube, the potential here seems profound.
Meanwhile, the distributor Ingrooves, which is owned by Universal, sought to cement advances in this territory by hiring Amit Sharma as its new country manager and announcing their first two signings: Himesh Reshammiya and Yo Yo Honey Singh. Beyond the majors, the promise here has been further heightened by the arrival of Paris-based label and distributor Believe, who reaffirmed their global ambitions by rebranding the Indian label Venus Music, which they bought in 2019, to Ishtar. In November, they also acquired Think Music, a label from southern India.
Contradiction seems central to the complexities of Africa
From the perspective of the music business and beyond, contradiction seems central to the complexities of Africa. In another assessment of emerging markets, Synchtank recently analysed this vast continent, which measures 30.37m km² and houses 800m people across 54 countries. We reported that, according to CISAC (The International Confederation of Societies of Authors and Composers), Europe brings in 50% of worldwide music collections, while Africa delivers 0.8%. But there is bountiful promise here, with the IFPI explaining that recorded music revenues in the Africa & Middle East region increased by 8.4% in 2020, prompted by a dramatic rise in streaming.
“Independent labels – often owned by artists – have become an important part of Africa’s emerging music industries. That’s why the global majors are so keen to strike deals with them.”
– Stuart Dredge, Music Ally
In a piece announcing that Warner had signed the Tanzanian artist Diamond Platnumz, which includes his label WCB-Wasafi, Music Ally framed the essential ingredients within such an arrangement. “Independent labels – often owned by artists – have become an important part of Africa’s emerging music industries. That’s why the global majors are so keen to strike deals with them, offering a path to global audiences as well as support within their domestic markets.” Again, there are comparisons with the strategy of another major, Universal, who launched a new label in July: 92i Africa. It will release material from Tallac Records boss and rapper Booba, alongside other new signings.
In fact, it’s apparent how much Universal’s footprint in Africa has been expanding in conjunction with the May 2020 launch of Def Jam Africa. The company, who now have offices in Cameroon, Côte d’Ivoire, Kenya, Morocco, Nigeria, Senegal and South Africa, began the year by promoting Sipho Dlamini to CEO of Universal Music South Africa and Sub-Saharan Africa. “There has never been a more exciting time for African music around the world, as it continues to influence and inspire culture and creativity, whilst reaching a wider audience globally each day through streaming,” he commented to confirm the news.
Sitting centrally within this digital exchange is the Chinese-backed but Lagos-based streaming startup Boomplay, which is estimated to have 50m monthly active users. In March, the service expanded their original 2018 deal with Universal by signing an agreement that increased licensing of their global music catalogue from seven to 47 countries across the continent. Importantly, digital distribution more broadly has also been strengthened here. At the start of 2021, Universal owned label services business Ingrooves acquired South African distributor Electromode, CD Baby expanded its international artist services team, while TuneCore, which is owned by Believe, opened offices in South Africa and Nigeria in February.
There has been additional activity from other majors and independents here. In March, Sony signed Gallo Music Publishers, part of the Gallo Record Company, one of the continent’s largest and oldest independent major labels, to a worldwide agreement, excluding Africa. Meanwhile, New York-based Downtown expanded their catalogue of talent. In 2020, they purchased South Africa’s Sheer Music, now considered Africa’s largest independent music publisher. They have also established a new department to explore opportunities both in existing and uncharted global territories, signing veteran South African musician Johnny Clegg to a global publishing deal.
The Middle East has driven a regional rise in recorded music revenues
Zooming out a little on this part of the world, there is excitement too about the possibilities of the Middle East, which has driven IFPI’s previously highlighted collective regional rise in recorded music revenues. In 2021, PopArabia, the leading music publisher here, celebrated their 10th anniversary by signing a high-profile deal with international rights company Reservoir. Elsewhere, Warner invested in the independent label Rotana Music, which will see ADA Worldwide, their independent label and artist services, distribute material on a global scale.
In August, Synchtank shone the spotlight on Asia, asking: “What is driving the formidable potential of China’s digital music business?” Revenues here have grown by almost 10% with digital hitting more than 50% of the total income across the region for the first time. Of the majors, Warner looked to solidify their longstanding relationship with Tencent Music Entertainment (TME) by launching a joint venture record label in China which will seek to plug into their partner’s impressive company profits, which reached $664m in 2019. Warner Music China also pushed their hip-hop imprint JUUICE deeper into Chinese territory and signed domestic star Bohan Phoenix.
Universal were active here in 2021 too, launching Republic Records China who signed the local pop icon Daisy Xue. They also rebooted EMI China, PolyGram Records China and Universal Music China, while the publishing arm of the company opened a new office in Shanghai. Surveying the historical resonance of this move, regional MD Joe Fang said: “About a century ago, a group of modern music companies were born by the shore of Huang Pu River in the great city of Shanghai and made history. Today, we have established a new Shanghai office with the industry’s finest team, top-tier creative space, and ready to serve a new generation of Chinese musicians who are eager to demonstrate their cultural confidence to the world via music.”
Sony signs deals with China’s two biggest music streaming platforms
Elsewhere, in May Sony became the third major to strike a new licensing deal with TME, who had previously confirmed details of a joint venture with Universal in 2020. This bolstered a working relationship that already encompassed the Hong Kong-based label Liquid State. Moreover, Sony also reached an agreement with NetEase Cloud Music, bringing together contracts with the two biggest owners of music streaming platforms in China.
Of the independents, Reservoir announced the expansion of its relationship with Outdustry, China’s foremost music rights and marketing services company. The original agreement, signed in 2020, is said to have resulted in dramatic increases in collections from the territory. Indeed, such is the momentum around growth in Asia that Denis Ladegaillerie, CEO of Believe, told Midem Digital Edition last month: “One of the things that very few people realise is that in this decade, we’re going to see a revolution, and that revolution is the number one music market in the world is going to be Asia.”
“One of the things that very few people realise is that in this decade, we’re going to see a revolution, and that revolution is the number one music market in the world is going to be Asia.”
– Denis Ladegaillerie, Believe
According to IFPI’s report, Latin America has “maintained its position as the fastest-growing region globally”, with streaming revenues increasing by more than 30% in 2020. Global distribution has been strengthened in the region too. TuneCore, which now has a foothold in Brazil, China, India and Russia, alongside South Africa and Nigeria, launched TuneCore LatAm to broaden operations across the area. Meanwhile, independent music distribution and marketing company Symphonic Distribution set up business in Brazil and Mexico, having also established a new base in South Africa.
Despite the challenges inherent in traversing continents to create connections during a pandemic, it’s clear that work is underway. But while resources and expertise are vital in these much less familiar emerging markets, so is a unique approach to each and every location from key players in the Western music industry. “They will need to shift their mindset from looking for export markets to territories where they can build new, domestic talent-centred business. A smattering of joint ventures from the Western majors in Asia and Africa suggest the first steps are being made, but to succeed these strategies will have to be seen as the central plank of repertoire strategy for emerging markets, not a supporting strand,” affirm MIDiA Research.
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