 It's the mat work. What's up everybody? It's Brian Manshawn and welcome to Music News That Matters where on the first of each month, we help you sift through the noise to bring you the most important industry news. We know there's so much information out there, but we're gonna focus on topics that are most relevant to you guys. And as always, we'll give you our perspective as well. In today's episode, we'll be talking about a very hot topic regarding the raging debate between artists and streaming platforms, mainly Spotify, about being paid more in royalties. And before we get started, since these videos are only once a month, make sure you sign up to our newsletter to get notified of the latest news and why it matters in between episodes. You can also listen to this podcast on the go now, along with this episode, along with all the future ones, because we're on Spotify, Apple Music, SoundCloud, and many more. All right. How you doing? Good, how are you man? Yeah, I'm all good. Yep, another week in lockdown, another month in lockdown. It's been a while since we've spoken about it, but another busy, busy month in the industry. Yeah, a busy slash not so busy, because of COVID type deal. What are we, just before we even get off of COVID, how long are we in? Is this two months now? It's got to be at least two months right, isn't it? I think, yeah, it's been eight of March, now we're near the end of May now, yeah. Hey, well, you know, best of wishes to you. I know that lockdown and lock-in is tough on you. Same for you as well, and same for all you guys listening and watching as well, because it's been a very tough time, not just for everyone in general, obviously for artists as well, and you guys watching, it's been pretty tricky. And one of the big debates this month, it's been sort of going on mainly in the UK, probably elsewhere as well, is about Spotify and other DSPs needing to do more to support artists with regards to helping them financially, because they're not getting any income from touring right now. Obviously, livestreaming has been helping to an extent, but there's a lot of lost income, and obviously there's been a lot of bad blood between artists and Spotify and Apple Music and Things for not getting enough money for years now, and it's really sort of like ramped up this debate of late. There's been a campaign called Broken Records over here, using the hashtag to try and campaign to get Spotify to pay more. It all kicked off at the beginning of the month, as an artist called Tim Burgess, who tweeted Spotify directly. He said, hey, Spotify, I feel like I'm working for you here. I really think we should look at how much you give to artists. We should work together on it. It's just not fair at the moment. You have an amazing thing, it just needs to be fairer. So it's all snowballed, there's loads of articles in the press about it, The Guardian covered it, Vice have covered it, Music Ally has done some pieces on it, and there's been a lot of new campaigns started since then. But what I thought we'd try and discuss is sort of like explain some of the potential options to give out a small money, and why it's not as simple as Spotify should triple their royalty pay amounts, for example. So I'm gonna try and explain to you guys a bit about, then you know, to give you the lowdown on what could be done and what situation is. Yeah, give me your words on the why it's not as simple as tripling the payment, that part, because we can really floor all kind of versions of the stakeholders or who should be giving up what, just the why it's not that simple part, what's your perspective? Yeah, because obviously I've been quite guilty of not really thinking it through myself, so I've been doing a lot of reading and it's been insightful, because obviously the first thing to point out is that Spotify doesn't pay you guys as artists or songwriters directly, they pay their money to labels and distributors and publishers and collecting societies, and then they pay you. So let's say, I think right now, Spotify has a royalty pool, and they pay about 65% of revenue to the labels, and also they keep the other 35% to help them run their business. And obviously this goes to the labels, they then give you some money, and obviously there's a lot of figures floating around about how much you get per stream, like there's a big one, which is like 0.0348 dollars. Now that this would have been worked out, obviously, after it's all been said and done, so you can turn that into a per stream rate by dividing your royalties by your number of streams after the fact, but also that's depending on how much the label actually gives you as an artist. So Spotify can't just triple this from 0.0348 to 0.01044 dollars, because that would mean it would have to triple its percentage from 65% to like 195%, not physically possible, obviously. So it's not up to Spotify to triple the royalty rate, they can't physically do that. That's something very important to understand from that regard. So who are we blaming? Who are we blaming? Well, I guess it all comes into everyone, so there's a few different options I'm gonna go through, but first one is an alternative method in terms of the way artists get paid, because one very popular system that people have been lobbying for for a few years is a user-centric payout system, because right now we operate on a pro-rata system. So this means that the biggest artists get most of the money. So for example, if Drake gets 5% of the total streamed on Spotify for that month, then his right-holder to get 5%, which means Drake's music gets 5% of your subscription. So even if you never listened to Drake on Spotify in that month, 5% of your money will still go to him. So the big artists always win, but in the user-centric model, your money goes to the artist you listen to only. So if you only listened to one artist that whole month somehow, and they'll get 9.99, they'll get all the money, plus subscription. Got it, interesting. I like that. You do, yeah. But how would that fuck shit up? So that means maybe Drake is pulling from a smaller pool because it might be a small number of people listening to him a lot of times in an extreme state. So that means that could easily, like even the playing field in some ways, or obviously the lesson, generally speaking, when you're talking about somebody like Drake, of course their level of commercial ability, they're getting listened to by a lot of people. But does that ever backfire at some point? So if I'm your fan base and now the split is between the 1,000 people that listen to you, all right? And so 1,000 times, let's just say this month, 9.99, well, no, we'll just stick with 10. So we'll say $100,000 to split, that's the pool, as far as the collective amount of money those people pay them. But then you have to split still between those other people that those people listen to, right? That's how that system will work. So you're pulling from a smaller pool, potentially at that point. And I wonder if it will benefit some people, but then some people, it'll obviously make their numbers even smaller. Just because of, you know, you might have a very few power listeners, which that could suck. So I mean, I think that one has to be thought through before you even demand the user-centric. It sounds better, but I would wanna walk down the line and really look at the stats on how many artists have an average of how many unique listeners. Yes, I guess monthly listeners is probably that gauge, but all right, but when we look at the full spectrum, how many artists are at what level? And then now what are you talking about? Because you need how many artists have, no, how many monthly listeners do artists have on average at different levels? And then you also need how many different artists an individual user listens to on average. Those are the two primary numbers in that equation, but I'm getting that correct. So I will be interested to see and hear more of that. So I could at least get some averages before saying that would be the go-to. I don't think it's a great idea in a sense that obviously the romantics will say that it's taking from the rich and giving to the poor, as in like, because the super fans might give them smaller artists more money than you usually get. However, we live in a very sort of like lean back listening culture at the moment. We've always streamed platforms and most of the big players people will put on will have the big artists on. So therefore they'll still be listening to those big artists. And the other point is that my concern with this system is that it can be very easily exploited. You could just constantly stream one artist on your account and they get all the money. So you could build like bot accounts and fake accounts and really drive up revenue. So there's a lot of things that we need to be ironed out with this. Yeah, that's interesting, even the bot angle. And also in some ways the rich deserve it because when you have a certain level of commercial success, there's a certain amount of fans that are on there and a certain level of legitimacy to the platform that made it that platform. So the company itself Spotify has to favor that in some way. If there is no far better option that gives, that makes everybody happy, you have to really favor the people that are the reason that your platform was able to hit a threshold in the first place. Exactly, yeah, but they're not gonna change it unless they're absolutely sure because obviously they keep Spotify alive with labels and then they feel they're not getting a fair share of the royalties now and they're gonna pull the plug and ask the end of Spotify. So obviously it sounds really harsh but at the end of the day it's a business and they've got to keep their best interests at heart and it just needs, this system could work but needs testing. I know that Deezer have been very keen in the past about trying to implement this. They were first doing a trial run this year just in France only, but it hasn't happened yet. But they are very keen on trying this model and seeing, I'm interested to see the results if it does go ahead but obviously given what's happened they're probably gonna pull the plug on that for a while. But it's certainly an interesting model. Yeah, so I mean, I kind of like the idea of really artists just getting a better deal in the first place on the front end when it comes to relationships with labels, managers or whatever because this will lose and it'll come and start to jump ahead honestly to, I know one or something else you wanna talk about which is the Joe Rogan deal. But it all speaks to one big pocket and one big elephant in the room that we don't address enough. All right, Spotify in their mission is this huge thing they wanna do for artists like helping so many but have a livable wage and all that stuff. It's a very pro artist mission that they have but the issue is, right, Spotify is a baby being born into a world of sin, right? They come into the music industry and it's already set up against them. You can't help the artist any more than you can get rid of the labels or go through the labels. You already have to go through the system that is set up against them. The labels have these artists locked in and they're the ones doing the licensing. You can't control or change the structure of their deals. You can only create a deal and whether it's 100% the best deal or not still doesn't change the fact that whatever your deal is the screwing that goes in on the back end of them getting a small portion of that. So it's an altruistic mission that is kind of set up to fail. Or no, not kind of, it is set up to fail as long as the labels or institutions that people think are scoring them over are the ones that are in control because also because of that control that they're given and gifted because of the catalog they have they have a district portion influence on Spotify because that's who you have to run through that's who you have to negotiate with. It might be more artists, it's society, right? Yes, there's far more people on the bottom but the people with the influence and what most of the weight is held is at the top. And unfortunately for artists in general it creates a situation whether or not Spotify truly wants to, right? It's not, it's almost unachievable which is why Spotify as a company when we look at like the deals like Joe Organ we start talking about the podcasting direction. I'm a firm believer that and to some extent Spotify has done just like, like so many people in the music industry, right? How do these, how does Jay-Z make his money? How does insert big artists make his money? Most of these people make their money outside of music, right? Especially not directly the sale of the music. Most of these people say, oh, I need to go somewhere else to get rich. And I think Spotify is saying, it is hard to make money in the music industry just like so many other people and say, how can we go make some money? And that's what it comes down to. Exactly. So you've touched upon like two points says in terms of two of your options I was gonna refer to. So obviously the first option we said was the user centric payout model. Now, another option would be for musicians to get a bigger share of streaming royalties from their own labels and management company. I'm not gonna go into too much detail about that but basically that would be a sense that, you know, the contract needs to be a negotiator needs to be a bit fairer at the start when they sign new deals. But the other point you touched upon is that should Spotify pay a higher percentage of its revenues out? So I said at the start they only pay 65% and obviously they keep the 35% back to, you know, keep the business afloat and keep it going and growing. Whereas you've got sites like Bandcamp that pay 90% of the money out. So should Spotify increase system or like 70 or 80% or higher? And this is what we get. You said they're at 60? 65%. 65? Yeah. This is when we get into the debate about where people get angry when they invest $100 million into the Joe Rogan podcast deal because obviously they keep them back the money to make these deals. So that's obviously in their best interest though to, you know, to grow and expand. So it's on one side should they increase the revenue on the other side they go around their business. And think about it. That's also showing you the value of your content. It does that so much so for creators in terms of podcasting. But it even gives you an idea even with the music, the value of your content. No, there's no single artist that's been paid $100 million deal. I get it. But if you look at it, 60%, right? Or 65%, if someone says, hey, you know, we'll give you 65% of the deal that doesn't sound that bad, right? It's not that violating. Yeah. But when it gets cut through all these other pieces then you end up with what you end up with. All right. So like, so, you know, in some senses I'm sure the licensing deal that these labels have are a little Joe Roganish, right? We just never think about what are the labels getting in mass as a whole? Because Joe Rogan's deal is a, to some extent not fully, right? But it's a licensing deal. I'll say that it is a licensing deal. I was gonna say music licensing deal, but because it's a licensing deal it does have some similarities. So when you consider that part, all right, what does it really look like? Okay, you're popping like this and I think it's three years, right? 100 million for the licensing and you still own it. That's the biggest difference between Joe Rogan and the artist, right? He still owns it so he can have control of it, license it and then at the end of the day if he wants to pop and keep moving he can do that, but just the fact that he's the one in control of the creative to a fuller extent changes the game versus artists who sign to this whole system or really the system is speaking for you. And then the other situation is artists who might own all their stuff but the leaders of your industry as a whole are still running through that same middleman, which is the labels. It's meaningful when the leader, right? Cause the leader sets the tone and Joe Rogan if Joe Rogan was signed to some other type of entity and kind of ran through a record label-ish type system himself then that also would have diluted instead of lower bar for how the other content creators but since he wasn't on that now you get to see a fuller vision and version of what that's worth. Exactly, this is why I want to talk about this topic really because the debate sort of feels like is the people versus Spotify but I'm not trying to defend Spotify here but I'm trying to be like objective but it's not all their fault. Everyone's got a part to play and they're not in control. They're not the gatekeepers. The labels keep Spotify afloat. They're not in control in this situation therefore it's not just them who should be getting attacked and that's what we're trying to do in this sort of discussion when I was trying to highlight that and it's the same when you talk about the Joe Rogan deal we know he's in control, Spotify are in his hands. He can pull out when he likes. They've got no control over what he talks about. They're obviously here to facilitate and move into the next level in terms of audience reach which is why the labels are on Spotify because they know they can get a lot of value from it. Yeah, and which is why Spotify is like F this music stuff. I want to go into this podcasting thing because Joe Rogan's setting the tone and he's legitimizing the platform even more so for podcasts but every guy's deal doesn't look like his and I'm not talking about payout. I'm talking about ownership. They bought the ringer I believe as a whole which is I don't know if you know that podcast but it's due Bill Spence Simmons. Very credible and dope podcasts and they're buying a lot of this other stuff outright whether they're owning. So it's cool. Okay, yeah, the worth of that, like the trickle down effect of even just licensing and having that exclusively even if we don't own it to trickle down to this other stuff that we actually own, it's you know, five billion dollars worth, right? How much the stock went up? Yeah, exactly. That's, it's a beautiful thing for them as a company and that puts them in a position where now you don't have this variable cost of whatever the licensing and what am I paying this month? You have a fixed cost because I own it and whatever costs to run this shit and any profit on top of that, whatever that looks like which I'm more interested in digging more into what that is. Do they, is it just the sponsorships that they're taking from or what? But whatever the profit is, you know, margins only grow, right? With the cost being fixed. Yeah. And obviously the funny thing is as well that a couple of years ago, Joe Rogan was asked about why is the podcast not on Spotify and he's like, you know, at the time he was like, we don't need to be like, I don't care about Spotify. And now here we are and he signed a deal to show you how the money talks on the business side of things. Like it wasn't in his best interest back then to be on Spotify. He didn't need to be, but now he's got the capital behind him. He's like, okay, I'll consider you now as an option. He was on Apple before? I think he was, I think he was independent. He obviously had a good relationship with Apple. He was one of the top podcasts on Apple, but he was just asked a couple years ago, why are you not on there? And he was like, it's not relevant for us right now. I didn't realize that he wasn't on it. Especially even like if he wasn't seriously on Apple, because that's even more so about your worth, right? If he was on Spotify already, he wouldn't have been able to get the deal that he got. It's particularly not to that extent. One, you're already on there. So, you know, so, you know, we don't have to convince you to come over. We don't necessarily have to talk exclusive. Two, we also are gonna be valuing you less on the brand appreciation than that, what's the word? Good, it's good something what is based on brand. I can't remember what it's called. Goodwill, I believe, the goodwill of your brand, it's just based on the numbers. Cause we already see what your numbers do on our platform, right? Yeah, exactly. There's that additional aspect of, okay, taking people from other platforms that we make it exclusive, but that changes the negotiation completely. So the fact that he wasn't on there and in a sense held out, whether it was all strategic or not, there was a huge benefit to that deal and how it happened. I know people who are like that with TikTok because TikTok was trying to get people to come over, right? Just like so many of these platforms do these days. Yeah, yeah. And like, nah, I don't wanna get on yet because I want to go through their system versus just being on there and then they see how I operate. Let me get money to get onto the platform. So, yeah, that's, well, I did not realize or think about the fact that he wasn't on Spotify, but that part should be noted for anybody who probably think, let me go start a Spotify podcast and then get bought up by Spotify, right? I think it's a little different. It's a little different. Because a lot of his viewership is actually on YouTube. That's where a lot of the views came from because the video format's on there. So he was still, he was still, yeah, exactly. So that was his, he's in control of that. He obviously, he was on Apple podcast. He was the number one downloaded podcast last year above New York Times daily, but he wasn't actually with Apple like exclusively. So he just showed you that. And now, and obviously at the time, he didn't care about Spotify because he was doing well on his own, but now he's seen the potentials like, okay, I'm getting a lot of money here. I mean, it can take us even further now in terms of like our reach. Yeah. He's also seen the long term strategy behind it now, but at the time it wasn't really relevant to him, so. And still owns it, man. Yeah. I'm sure there's bonus incentives attached to things and like all type of performance and back end things that the deal, I would not be surprised if the deal was at least 200 million plus after all my money is allocated, but I don't, you know, I don't know. You should certainly shake up the industry now and the podcast in book is also it's having it's like, this is like a very big like wash head moment for like, you know, new big deals being signed. Yeah. We already saw the trend start where podcasts just started to pop up more and more out of nowhere. Anyway, it became a popping thing again. So I mean, you add on the fact that there's money in the game. People are thinking everybody who has a podcast are like, holy shit. Like they weren't, that weren't even thinking about that kind of thing. It just automatically just should change your perspective. I get it. There's nobody who has a podcast, especially anybody who has a consistent audience no matter what level that is. They're now like, you know, this is a business opportunity. It's the same as shoot anything that starts more that could be niche, the love, like even sports, right? It was the culture in sports when people were making $30,000 a year or barely making more than anybody versus now you're making hundreds of millions, right? And now it goes from, I have like my godfather was like, he could have went to the league or he, but his mom was sick. So he rather just get a job closer to home, right? So he can take care of his mom. You try and take that till today. I need to go to the league so I can take care of my mom. Exactly. Yeah, yeah. It's a different level of money and people are farming their kids to go to the league. And now I think people will be farming maybe not necessarily training their kids for a podcast. All the, there are people doing that with their kids and in terms of influences. And takes out, yeah. Yeah, there'll be people a lot more strategically like saying, oh no, we're not just having fun conversations, it's like we can get some money. We might not get a hundred mil, but we can get a mil. We can get 400,000. It's gonna be interesting. And I think content as a whole though, I don't think artists felt it as much as they should, but that was a big win for content as a whole for anybody who noticed it and pays attention to the fact that that showed a sense of value, right? Like Drake should be looking at that, right? Everybody should be looking and then start realizing, oh shit, my content is just like Beyonce was with the Coachella and she showed that to Netflix. Like all those things are like, okay, hold up. No, this content is worth some money. Like, oh, I can't just perform at Coachella and take the performance fee. I can get less on the front end, it's like anything else. And then resell us on the back end for $50 million more than they would have paid me just to perform. And it's something I'm already doing, play what? You know, the content, the way we think about content has to change and it's not just a podcast thing. Echoing what you've just said about big artists need to take notice. There's actually a nice quote from Ted, he's a music writer called Ted Yeower, I think I'm not trying to pronounce his name, his surname, but he said that a musician would need to generate 23 billion streams on Spotify to earn what they're paying Joe Rogan for his podcast rights. So what they're saying is that Spotify values Rogan more than any musician in the history of the world. So there you go. Yep, there it is, there it is. And, you know, that's just going through the record label system. Are they basing that, cause he's basing that on what artists get paid, right? Well, I imagine in a sentence though that, yeah, I guess they would take equivalent 23 billion streams and obviously no one's hitting that kind of numbers like. So I guess it's from that perspective as well. Yeah. In terms of the popularity, but. Yeah, I mean, so yeah, I mean that all still goes back to one, not being a complete ownership and at a point of leverage, right? Like I think with Taylor Swift, even though she's still the label systems and all that stuff, at least she had a point of leverage in terms of how long it took her to get on Spotify and went about that. Jay-Z did that to a less, to an extent, but I don't think the impact of him being on Spotify would be the same as, you know, Taylor Swift. Like they, there's artists out there to do some similar things, but one, they two things are working against them. Obviously there's probably just more artists in general. But two, that lack of just soul power and ownership to be able to say, look, you're doing a deal with me and I'm going to give you everything and then it's going to have all these streams. It's going to have all of, all of those things. Like that's lessening the deal. And three last but not least, which can't be ignored. It's about future business opportunity, right? Like the fact that Joe Rogan is legitimizing them as a podcast space, right? And where they move in the future, that that's about a future business versus, well, we already got, we started with this artist thing and then we did our deals and labels probably got more similar deals than some, and Joe Rogan, if you break some things down, but we're in this business already. The value of our future is far more valuable than you people that we already have on there. It sucks to hear it that way, but it's like that Joe Rogan isn't worth that to everybody. It's just like Instagram, $1 billion from Facebook, WhatsApp, $19 billion from Facebook, but it's not necessarily worth that to every company. So that's also market timing as well. Taking this down to a really, really, really micro level about independent artists and how you should have these like business mindsets and conduct yourself. Obviously to get your foot in the door now and to get heard by a label and get in conversation, you have to have a big presence already. You have to have some social proof. You have to have, you're selling out shows, you have to come load of all your stats and what you're achieving. But if you do achieve that and get into that room, you need to use that as leverage because you're already in a position where you can negotiate that. And if you do that from the very start, then obviously the higher you go up, you'll have that reputation, you'll have that mindset and that's how you will grow because you can't get in the door now on talent alone. So you need to come in with your leverage and then utilize it. Yep, 100%. Drawing back to our sort of wider debate about the artist versus Spotify and even though getting ways we can sort of increase the royalty payouts. Another option which I am pretty like, I think this could be a good idea. It's not gonna revolutionize it or anything but the idea of people needing to pay more for their music subscription. So obviously right now in the West, it's very common that we pay $9.99 a month for Spotify or Apple Music or Diesel or Amazon Music. But I really think that they could take steps to increase this. So if someone said to me that, so if Spotify said next month, we're increasing our prices by 25%, so gosh you $12.50 a month for a subscription, I'd be totally okay with that. It wouldn't really, you get a lot for your money anyway and I'll see we've seen companies like Netflix very slowly raise their prices slightly over time. I don't think there's enough risk being taken from DSPs to like slowly raise these prices. And I'll see if they do that, then obviously that means there's more money going in anyway from subscribers, so there's more money to go out to artists. Right, right. So what would be your recommendations in terms of price? Well, if they said they'd be like $12.50, I'd be fine with, if they were to increase it by $2.50, then I'd be totally fine with that because I always think back to when I was younger, I would always just, I'd buy a 9.99 CD for an album of my favorite band. Now I get anything I want on the planet for 9.99 a month. It's just mind blowing because I would be spending so much more than that in the past. Yeah, consumers aren't trained to think like that. So it could be an interesting thing to see you go from 9.99 to 12.50 and then maybe another four or five years, it goes up another dollar and do it like that over time. That's what Netflix have done, isn't it? They've gone up a dollar, like when I first started from Netflix, I'm pretty sure it was at least $1.50 and over $2 cheaper than it is now. Yeah. And that's only in a space of like three years. You can do it very subtly. You could increase it by 50 cents and then just do that once every year or two. Like I think there has to be some sort of, someone needs to buy the bullet and try and instigate this going up, say, because also on the flip side of this, the average revenue per user is going down because obviously they're doing a lot of like promotions like get three months free premium. So for the first time in the last quarter on Spotify, for the first time ever, the average revenue per user went below $5. So under 50% now of your subscription. Yeah. It's because of the free giveaways and stuff. It's because of the free giveaways or is it because of, I don't have any COVID relation. No, no, no. It's just from the whole of Q1 for Spotify. So no, it'd only been the back end of COVID. I mean, it'd only be the eight days of COVID, I should say. So it actually got, it's actually dipped below $5 now for the first time. So below 50%. What exactly are they giving away for free? What do you mean? You said there's all the free giveaways that are taken away from revenue. Well, you know how they offer new subscribers deals? Like you used to be like three months for 99 cents, but now they're offering you three months free premium for that to be free. So a lot of new subscribers come in and they take this free travel and they'll see they stick to the free tier. And obviously there's a lot more users now, but obviously they're not paying into it there. So that's why there's been a massive nose-diving this other revenue for years now. It keeps going down each quarter. Now it's dipped below $5 for the first time. Yeah, they're on this aggressive scale. Well, I guess attempt within that just to continue to dominate market space, but it seems pretty tough to take away your qualifier, right? And free versus 99 cents, 99 cents is a lot, but from running plenty of campaigns, I do know a qualifier, somebody who pays, well, no matter how much that payment is, is more qualified than somebody who comes in for free as being someone who's likely to ever purchase. So yeah, that's tough. I wonder more about that move if the company sees it's worth it. Yes, the revenue per user is down, but do they from their perspective see it worth it for whatever other means that they're, well, whatever end they're trying to get to? On the flip side of this, on a more positive outlook in terms of, if you know, getting more royalties, over time it's gonna see more because obviously the business is gonna grow. So for example, 45.5% of all subscribers are actually premium subscribers anyway, which is quite a decent amount and that seems to be growing all the time. And since 2016, they've gained 229 million subscribers. So that's 229 million more, it's a lot more money. And obviously, three years time, it could be another 200 million. So it's a lot more money going in the pot anyway. Therefore artists will benefit and get more money over time. So like, things are still improving, Spotify is still growing, therefore the money is still gonna be growing as well. Yeah, sure, I can see that. I can see that. So that is more of a positive outlook on the situation. The other option or the other sort of thing that was been floating around obviously is that should fan funding play a bigger role in streaming? And obviously this has been the first whole month with the new COVID-19 relief button, the artist fundraising pick on Spotify. And I've seen that the quote is that 50,000 artists have used this so far, but I've been reading a few articles on artist feedback and stuff and they're not particularly impressed by the, and they're not reusing the feature because it's obviously still very hidden away and it's labeled as COVID-19 relief fund which makes it sound like a charity thing to do with COVID, not to do with like the radio money for the artists and I feel a bit iffy about actually promoting it and stuff. Yeah, I wonder if that's the problem then because I know an artist, well I've been waiting to get her feedback going in and she said it hasn't appeared on her stuff yet. Maybe she's even confused. Certainly on mobile as well. Certainly on the mobile app, not on desktop. And a lot of people are using desktop right now because they're working from home. Not committing, so. It needs some work and obviously, will it stick around now if it's all said and done as well? There's another question. Is it going to stick around? And if it is, it needs to change to be more of a positive thing like the stickers on TikTok or it's not been, as I said in the last podcast, I don't think it's been implemented very well. It feels very rushed and hasn't, the wording behind it all seems a bit iffy and there's a debate whereas do I promote a charity or do I promote myself? I don't want to promote myself as a feel guilty but at the same time I need the money and people just very hesitant over it, very weary about it and it's not been a, I don't think it's been a roaring success like Spotify might have been hoping for, put it that way. To me it sounds like they weren't hoping for it. Just the habit named in that way. It sounds more like we do this just to say we did it and maybe and kind of set it up to... Well, I mean, in a sense, it's not getting a positive PR because obviously all the PR, if you Google it now, like it's fundraising pick, all you're seeing is articles about, it's learning about it. Oh yeah. So obviously they were trying to, obviously maybe make it not impactful but at the same time, they are getting a lot of negative press about it which they won't be happy with. Yeah. Yeah, they could have did well by just not doing it at all. Maybe, maybe, but again, they need to show some sort of response, don't they? Because obviously they're getting always on the fire right now. Yeah, I was just saying. The whole thing was talking about it. People would have talked about they didn't do it or they weren't doing it. And then that lasted, that would have lasted the cycle that it lasted but they wouldn't have had the, hey, this is about to happen. This sucks. Wait, this is trash. And up now, whenever they take away the future, the future, did we talk about it again and the fact that it didn't work? But, who knows? Maybe the value of the attention from it. I don't, yeah, I don't know. I can't really figure Spotify out when it comes to that particular, that feature. Staying on this topic but leaving Spotify behind, the badges and fan funding is coming to Instagram, on Instagram Live. So you didn't have to purchase your own badges which you can send to creators to support them. Which is obviously a good thing. Obviously it's been done on TikTok a lot and now it's coming to Instagram for Live. So they've actually put out some interesting stats so that there's been a 70% increase in views of live streams between from February to March, which is obviously massive. Obviously, Kira's got a massive part to play now but 70% is still huge. How this is gonna work is that badges will appear next to a person's name throughout the live video. So fans who have bought these badges will stand out in the comments. And then they also apparently unlock additional features including placement on a creator's list of badge holders. So they'll be able to have some more engagement with the actual creator while supporting them. And they're gonna start rolling out of the badges with a small group of creators and businesses over the coming months. Mainly I think in the US right now but it's gonna roll out to Brazil, UK, Germany, France, Italy, elsewhere as well. But they're starting to dabble now in this fan funding which I think is a very good thing. Yeah, I mean, typically I would look at something like this as like just trying to keep up and not be able to do it well because your users aren't trained for it. All right, this is not the youthful audience on Instagram as much anymore. But I don't think that applies here because one, a lot of TikTokers are still on Instagram and they have some audience there. And then two, I think there's still enough celebrity incentive when it comes to Instagram that if people do it enough like people want that attention from those people. So it is all, it has a relation to get more attention from those people and things like that. I can see over time this becoming a part of the platform, like a norm of the platform. You can see people get donations while you're in lives and stuff. And I see your point about it's not the same audience to TikTok, for example, but that's why I brought up the fact that it's grown by the live stream viewers by 70%. That's probably a lot of first-time viewers that have experienced this and now we're getting more familiar with the live streaming. So therefore they were able to adopt this because they're very new to themselves. Yeah, yeah. The other news on Instagram is that IGTV is now gonna have adverts for the first time. So they're gonna start rolling out that. But obviously IGTV's got a long way to go right now. It's never really kicked off as they hoped, but they are now gonna start running ads for up to 15 seconds. They're gonna start testing it in the US and Canada in close beta over the next few years. They're gonna start running. Oh, okay, never mind. I get it. Ads on the videos for up to 10 seconds. Yeah, yeah, so yeah, yeah. But that, we'll see how that goes. But obviously IGTV's started out as its own app, moved into Instagram, then tried to improve the individual app. And now I just don't know where it's at now, like in terms of how many people use it. Yeah, yeah, they're trying to make it work however they do it. And I do know, well, I knew and predicted it, that yeah, IGTV will have ads just because it's been a year or two, but like for one, when I started having things that I uploaded and I could see the content ID system, try to block certain things on Instagram, like, okay, they're developing a content ID system. What is that for? That's just a predecessor to a system that to be able to support ads in that way. All right, and then also Facebook. You've been able to monetize shows and content on Facebook for a while. And you know, those two are the back and forth. IG creates a feature and then it gets thrown on the Facebook and Facebook creates a feature or two that gets thrown on the IG. So it was pretty clear to me for a while that that was gonna happen. And I don't think now that it has happened based on the climate, that it's really exciting people like they might want. Because obviously TikTok came along and obviously that's what's probably the standard of its growth in that regard. But speaking of new features, Facebook's throwing out a new feature as well. I don't know if you've seen, there's one called Collab, where like three independent videos are playing in sync at the same time with by three different users. So they're using it as a way of like making music together, which is quite a little quirky little thing. It's not gonna be very massive, but it could be useful and fun to explore for musicians. It's a new way to sort of like mix and match original videos. They're gonna roll that out over the, to US and Canada for the next couple of months. And now see what you can do when you created the Collab with your two Facebook friends. You can publish it and others can then take the individual videos and do their own videos on top of that, do their own mixes as well. So just starting to keep an eye out on them. If you wanna try out new things and try and get some more engagement, like collaborating with other Facebook musicians could be quite good. You can share obviously, you share your audience pages out reached in as well. So I'll go into more detail about this in the newsletter about how you can go about signing up and things. But yeah, it's a new feature on Facebook. And finally, there's a couple of news items about TikTok. First of all, it made $3 billion in net profit last year, which is mind blowing. It's over three, I should say, it's 17 billion in revenue last year as well. And then the three billion of that is net profit. Wow. Which is just extraordinary. Yeah. I think for context, it was the revenue the year before was 7.4 billion. So it went to 17 billion in the space of a year. Baby. No, bite dance. I mean, yeah, I'm not gonna bite dance like that. Yeah, yeah, yeah. To go with that. Sheesh. That's a huge jump. That talk about me. You need 10 billion, yeah. You need 10 billion dollars, yeah. That's hyper growth. What was in that profit when they were at 7 billion? Oh, I don't know about that figure on my notes. Well, we make it congruent, all right? It wasn't even, it might have been. Maybe it might have been just under a billion. Yeah. Probably not, probably maybe even less than that. Yeah. Maybe like three quarters of a million, a billion, yeah. Yeah. And then you factor in the fact that you're probably investing in the future to scale. Yeah, that's crazy, man. That's crazy. I love it. They've also just bought, yeah. They've also bought a new office in Times Square, like loads of office blocks today. It's funny, man. Like that's the, you know, as much as like things evolve to like more digital and more work from homes and things like that, and less retail, it seems like the end all be all when companies make money, it's like, let's shit on people with the beautiful office space. Exactly, literally, like it's gonna be sort of at least a 10 year lease for 232,000 square feet. I think it's about, it says 105 to 135 dollars per square foot. So it's gonna cost like two to three million dollars per month for the space. So yeah, you make the make-up with profit, we're gonna splash out on a nice office in Times Square. Must be nice to work for TikTok. I see they're, I always see them advertising, they're gonna be, talk about the job market being like smaller right now, but they're just advertising an absolute ton of jobs. Their expansion is absolutely rapid. Yeah, they are. And this makes me think about a live nation acquired some space, not too far from Tony, you mentioned it. And I forgot how ever much money it was and whatever the lease was, but then it was like a nice way nicer office space. And he was thinking that, you know, it might suck, they must have committed to that beforehand before COVID, but now dealing with COVID is live nation. And I actually thought possibly different because live nation does know that they're gonna still be around. They know that. That's potential takeover as well from Saudi Arabia. You said what? Potential takeover from Saudi Arabia as well, so. Okay, so there's that. At the end of the day, if we're gonna be here and we do have money, they could be investing in the future as well, where, hey, this is probably a great market for commercial leasing, where, yeah, the deals are better. There's a lot of uncertainty. You have a far better position in terms of negotiation. So I wouldn't be surprised that we heard more companies like this, or if somebody who really knew about it, like if there was an influx of these type of companies making these type of deals in this market because of the uncertainty is, because it's probably a discount on commercial real estate and offices. Probably, yeah. And the last thing we're gonna leave on, which I think I know you're pretty excited about, is ByteDance's streaming app, Rezo. Obviously, interlink with TikTok. So the new story about this is that, obviously, Rezo's only available in India right now, that are actually making the two apps, like TikTok and Rezo, like cross-compatible. So TikTok now gives users one tap access to the streaming app, Rezo. So if you see an original song playing on TikTok, you can click the button and it takes you through to Rezo directly. And it's also a back button that takes you back to TikTok. So trying to make, integrate these two apps and it could prove to be a massive success, Rezo, if all goes to plan. Yeah. I mean, I said this, you know, that's all I could say. You know that it was written of the world doesn't, which just makes me want to drop that article even more. But it's just, it only makes sense in terms of user behavior. I have, you know, some homies and people at the agency that say that they think TikTok itself will be a streaming app. And that just doesn't make sense in terms of, if you really understand tech and infrastructure and user experience and the need for user experience. Like if they became a streaming app, they would literally be sacrificing the thing that makes them who they are. Like, Yeah, and it leaves them too much in music now. Like TikTok is bigger than music. Yes, that is the primary driver, but it's still bigger than music, right? In terms of the app. So you have to be still built for that. So you can continue to scale that side, but then capitalize off the music. So it makes far more sense to have a handoff, a clean handoff versus becoming both of those things. But yeah, that focus, that focus is huge in business discipline. And I'm just curious to see what Reso really looks and feels like in English. I don't even want to try to play around with it. Yeah, when they launch their state side, yeah, yeah. If they can include just a few bits of what makes TikTok so popular, then they can really build a hit with the app. Like if they can just integrate in some of the videos that play while the music's playing and having these user comments that float around as well, like if they can just make it a lot more inclusive and social, then they might have the actual first true social media, music streaming platform. Yep. We haven't seen yet. So watch this space. And that is pretty much a wrap. But what I wanted to cover today was really deep dived into the whole the people versus Spotify debate. And I hope I've bought some more context to take the load a bit off Spotify and sort of shift it a bit more towards labels. But they're all equal in this. Like I'm not saying that Spotify should be doing more, but I'm not going to attack them in this. So I'm also not going to defend them. But it's just there's a lot more to it than just saying Spotify to triple their royalty rates because that is just not feasible. Yep, exactly. Yeah, I mean, you said it. I don't have anything to add, man. That's yet another episode of Music News that matters. 100%. Yeah, let us know what your thoughts are in the comments as always. And keep sharing the podcast and liking it. And we'll see you all next time. Peace. Ciao. It's the network.