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Hot Pod Insider

Insider July 21, 2022 — Those TikTok teens really love Kate Bush

Plus, Warner Music cuts a deal with SoundCloud to use its artist-friendly royalty system

It’s a music-heavy day here at Hot Pod, and you may be like, “Hey, this isn’t what I signed up for!” Perhaps not. But as I have said (repeatedly), what happens in the music industry directly impacts podcasting. The more expensive and chaotic music becomes (which is saying something because it is already quite expensive and chaotic), the more impetus streamers like Spotify and SiriusXM have to invest in the podcasting space. 

Today, a new deal that could shift the way streamers pay music royalties, a report shows that, yes, new music really does suck nowadays, and another company reads the writing on the wall re: video podcasts.

Will user-centric music royalties go mainstream?

It is looking more likely if the Warner Music deal with SoundCloud is any indication. This morning, the companies announced that WMG artists on SoundCloud will participate in the steamer’s Fan-Powered Royalties system, making it the first of the big labels to embrace the model.

SoundCloud made waves last year when it introduced the new payout model in which money paid by subscribers is allocated to artists they actually listen to. That may seem like a no-brainer, but it is far from the industry standard. The pro rata model, which is used by industry heavyweights like Spotify and Apple Music, pools all subscription money and divvies it up based on total streams across the platform. That means that subscribers are paying for music they never listen to, smaller artists aren’t getting the money from the streams they manage to rack up, and the superstars snatch up almost all the revenue. Rolling Stone reported in 2020 that the top 1 percent of artists get 90 percent of streaming royalties.

SoundCloud has used this model to attract indie and amateur artists, and it has worked like a charm. Previously, FPR was only available to creators who use one of its premium services, like the Repost tier for $30 a year and the Pro Unlimited plan for $144 per year, and the company saw those subscriptions grow by 30 percent since the new royalty model was introduced.

I am curious as to why Warner cut the deal. Although it is the smallest of the big three labels, it still has the massive stars like Dua Lipa and Cardi B who benefit the most from the pro rata system. Maybe it is trying to keep its smaller artists happy, or perhaps the deal extends to its music creator service, Level (a representative from SoundCloud was unable to confirm whether this would be the case). Or, since SoundCloud is a smaller fish, it’s a way to gain some artist goodwill without pissing off its top hitmakers.

It seems unlikely that we will see the big players convert to user-centric royalties any time soon, but moves like Warner’s could move the needle. Spotify has indicated that it could be open to a system like FPR, but only if it becomes an industry standard. 

Nobody cares about new music anymore

Okay, it’s a little more complicated than that. Luminate released a mid-year report on music listening, and it confirmed the apparent trend that older hits are outperforming new music. New music only accounts for 27.6 percent of all music consumption this year, down from 30.6 percent last year, while catalog songs have a market share of 72.4 percent, up from 69.4 percent in 2021.

There are a few things that contribute to this. First, not all “catalog” music is particularly old. One-third of those songs were released between 2017 and 2019. Second, as older generations join music streaming services, they bring their preferences with them. Not surprisingly, Luminate reports that Gen X listeners prefer music from the ’90s and ’80s, while Boomers relive their glory years (sorry, Dad) from the ’70s. And lastly, yes, there is the Kate Bush effect of Gen Z listeners rediscovering old bangers and sharing them on TikTok.

A well-placed sync, when a song is used in a show, movie, or advertisement, can create that kind of event. That’s what Stranger Things did for “Running Up That Hill.” Within 10 days of the season premiere, “Running Up That Hill” went from 22,000 streams per day to a peak of 5.1 million. It’s an extreme example of the kind of moment music publishing companies are trying to achieve.

And as much as Spotify, SoundCloud, and other streamers work on their music discovery functionalities, TikTok is far and away the most powerful tool for music discovery among young listeners. Two-thirds of Gen Z TikTok users say they discover new music on the platform. You can not monetize music directly on TikTok, but its cultural sway sure made Kate Bush a bundle.

Podcastle moves into video

I am aware I sound like a broken record, but the great podcast / video merge won’t stop. Podcast creation tool Podcastle has introduced a video interview feature as video podcasts become an increasingly important part of the ecosystem. “With major video platforms like YouTube dedicating entire departments to the podcasting market, the industry is experiencing a major expansion,” said Podcastle CEO and founder Artavazd Yeritsyan in a statement.

The major platforms are getting behind video podcasts as YouTube gains ground in the space. Apple Podcasts supports video, and last week, Spotify announced it is expanding video podcasts to six additional countries, including France, Brazil, and Spain.

Stay cool, and see you tomorrow!