This week, the music economy is being called into question, the use of AI is being questioned and conflicts and competition between the various players in the industry are on the increase.
#1. Where are we at with the TikTok ban in the US?
The conflict between TikTok and the United States is still going strong. On April 23rd, the Senate passed a bill banning TikTok from US territory if ByteDance, the China-based parent company, does not sell the platform. The bill aims to address national security concerns about Chinese access to US user data.
Last month, a stand-alone version of the TikTok divestment or ban bill was passed, giving ByteDance more time to sell the app but also limiting its control over the algorithm. Given the tense situation, Senator Maria Cantwell stressed the need to prevent espionage or other activities harmful to Americans, rather than punish ByteDance or TikTok.
Even though the ban would have negative economic and social consequences, some experts believe that it could benefit US-based social media companies.
#2. AI features on music streaming services, the latest questions
Tencent Music Entertainment (TME) has developed and deployed several AI tools to enhance the experience of music listeners and creators. However, the Chinese music streaming service operator highlights several potential risks associated with this use of AI, in its annual report.
First, without any surprise, it’s all about making sure what goes into the algorithm. Just as in any other field, faulty and biased algorithms can compromise the quality of recommendations, risking uninformed suggestions. And for music streaming, that’d be a shame. Which naturally (so to speak) drives us to the ethical issues AI raises everywhere it goes. Here, we’d be looking at privacy for the users that could be taken too lightly in the name of feeding the AI. But we’d also be looking at the potential impact of employment in the music industry; what about curators?
Of course, copyright is on everyone’s mind, that might have been the first thing that popped into your mind. It’s true, there are uncertainties about the ownership and protection of AI-generated products, as well as compliance with copyright regulations. Legal frameworks are tough to keep; AI is moving at such a pace that it may not be enough to guide businesses in their use of this technology.
Summing this up, Tencent warns companies of the potential risks associated with the uncontrolled adoption of AI in the music industry and advises them to adopt a cautious approach in their use of this technology.
#3. A new vision of the music market
LISTEN (user-led) is a segment represented by streaming services, which monetize consumption on a large scale. This is essentially traditional music streaming, offering a passive, consumer-focused listening experience and PLAY (creator-led) is a segment that includes highly social destinations where fans engage to create, connect and express their identity. It focuses on the relationship between artist and fan, encouraging a more interactive and participative experience.
These two segments highlight several key trends:
- Streaming, once seen as the future of the music industry, is now established as a mass consumption platform and does not fully meet the needs of creators and fans, leading to the emergence of a growing demand for more social and interactive experiences.
- Social media is becoming the main place for interaction between artists and their fans, offering alternative monetization opportunities such as merchandise sales and brand sponsorships.
- Bifurcation theory predicts an evolution towards separate ecosystems for streaming and social media, each offering unique and complementary experiences for listeners and creators.
Bifurcation theory proposes a vision for the future of the music industry in which streaming platforms and social media co-exist as distinct market segments, each serving different needs and preferences of consumers and creators.
#4. Blackstone still in the running to acquire the Hipgnosis Songs Fund
The competition to acquire the Hipgnosis Songs Fund (HSF) has taken a new turn with the entry of Concord and Blackstone's intriguing response. Concord recently submitted a $1.5 billion offer for the assets of HSF, slightly outbidding Blackstone's previous proposal. However, Concord's proposal also included the intention to sell approximately 30% of the HSF portfolio within 18-24 months of the transaction.
In response, Blackstone has advised HSF shareholders not to act at this time, raising questions about their strategy in the battle to acquire HSF. Currently, the majority of HSF shareholders have not yet accepted Concord's offer, paving the way for other potential bids. Blackstone remains firmly in the race and is clear that it will strategically evaluate its options.
Overall, the battle for control of the HSF is far from over. The next few months will be crucial in determining the winner of this competition for one of the major players in the music industry.
#5. Latin music is on the rise (still)
In 2023, Latin music revenues in the US exploded to $1.35 billion, a 16% increase over the previous year. This growth is being driven by an increase in on-demand Latin music streams, which grew by 22.2% in the first 34 weeks of 2023.
Streaming has contributed strongly to this increase as it now accounts for almost 98% of total revenues for this music genre, while sales of physical Latin releases such as vinyl and CDs have recorded a year-on-year decline of 31.2%.
What's more, the emergence of a ‘new generation of stars’ is providing a huge boost to Latin music's commercial expansion, with its share of total US revenues rising from 7.3% in 2022 to 7.9% in 2023. Several industry players are taking advantage of this trend to buy publishing houses, and music companies or launch catalog investment funds.
