This week, we’re taking a comprehensive look at the state of the music industry. How are artists navigating the rise of AI? The influence of TikTok? The growth of labels? Let’s see!
#1. TikTok Replaces Hundreds of Jobs with AI
TikTok has recently carried out significant layoffs, particularly within its content moderation teams, as the company shifts towards using AI for moderation. In Malaysia, less than 500 employees will be affected by these cuts, while 125 positions—about 25% of the UK's moderation division—are also at risk.
These changes are aimed at strengthening TikTok's global content moderation model. Additionally, the company plans to invest $2 billion in trust and safety initiatives, with a focus on improving efficiency through AI. However, this growing reliance on automated moderation has raised concerns. Experts, including John Chadfield from the CWU union, have criticized the company for treating moderation staff as disposable, highlighting the human toll behind AI technology.
These layoffs follow similar cuts earlier this year in TikTok's Indonesian e-commerce branch and its sales and advertising divisions, as the platform continues to restructure and optimize its global operations.
#2. AI-Generated Music Worries Spotify Artists
Artists have long criticized Spotify for its inadequate royalty systems and questionable content moderation practices. Now, a new challenge has emerged: the rise of AI-generated music, which increasingly competes with traditional musicians. Groups suspected of being AI creations, like Jet Fuel and Ginger Ales, are amassing hundreds of thousands of streams despite having minimal online presence.
The impact of this AI-generated music on royalties for human artists is still raising concerns. Ed Newton-Rex, former vice president of Stability AI and now CEO of Fairly Trained, emphasizes that AI models often exploit the work of real artists without compensation. While some remain optimistic, arguing that these practices do not threaten musicians' livelihoods, Newton-Rex advocates for stricter regulation, calling for greater transparency and proper labeling of AI-generated content.
#3. Spotify Opens Up to Video Creators to Expand Its Offering
Spotify is stepping up its game by targeting video creators, with plans to invest up to seven figures, according to Bloomberg. The audio-focused platform is now looking to attract YouTube creators to host their video content on Spotify. The goal? To expand its video catalog without taking on production or exclusive ad sales.
After pouring hundreds of millions into podcasts in 2020, Spotify is shifting its focus to visual content. With a reported 88% increase in users consuming video podcasts, the platform is embracing a "format-agnostic" approach, where audio and video can seamlessly coexist.
However, Spotify isn’t turning into a full-fledged video platform. Instead, the goal is to enhance the user experience, allowing subscribers to switch between watching and listening based on their preferences. By diversifying its content, Spotify hopes to not only retain its current users but also add a new layer of engagement to its platform.
#4. Music Discovery in the Digital Age
Thanks to the algorithms of streaming platforms and social media, as well as the accessibility of self-production solutions, independent and niche artists can now develop their careers and earn a living from their music without depending on traditional gatekeepers like major record labels. This shift enables them to cultivate authentic global audiences around specialized genres.
As self-distribution gains traction, many companies offer tailored support to help artists grow. They focus on early talent detection and provide resources that cater to artists’ specific needs. Their technology tracks streaming data to identify promising artists and assess key indicators, such as the "intent rate," which measures how many listeners add songs to their playlists. This innovative approach offers strategic support, ranging from funding to targeted marketing, enabling artists to succeed while staying true to their musical identity.
#5. Universal Music Finalizes Full Acquisition of [PIAS]
Universal Music Group (UMG) has completed its acquisition of 100% of [PIAS], after initially purchasing 49% of the company in 2022. Co-founders Kenny Gates and Michel Lambot sold their remaining shares, but Gates will continue as CEO. With this acquisition, UMG integrates two key divisions of [PIAS]: [Integral], which specializes in physical and digital distribution for independent labels, and the [PIAS] label group. [Integral] will merge with Virgin Music Group, while the [PIAS] label group will remain autonomous.
Kenny Gates, who signed a long-term contract to stay on as CEO, praised the acquisition, emphasizing that it will allow the company to continue providing high-quality service to the independent music community. Michel Lambot, who will step down from his operational role but remain as an advisor, expressed his satisfaction with the successful partnership with UMG. UMG’s leadership believes this acquisition will strengthen label services operations and provide increased support to independent artists and labels worldwide.
