09/08/2024
Our Founder dropping some knowledge bombs about how artists can create a long lasting life for their back catalog of amazing music!
Maximizing Music Catalogs: A Strategic Shift For Sustainable Success
Categorized as 'catalog music,' a song earns this distinction six months after being released. Luminate's 2023 data reveals a seismic shift in music consumption: global music streams surged by 34% to 7.1 trillion, with catalog music securing 72.6% of the U.S. market share—overshadowing the mere 27% held by newly released music. This trend highlights a significant pivot towards older music, as evidenced by the shrinking dominance of the top 200 tracks, which saw their streaming share halve from 10% in 2019 to 5% in 2022. It is estimated that the industry's behemoths, major record labels, own over 1 million songs each, with independent labels and artists on average owning over 10,000 and 50 catalog songs. Given the size of these catalogs, a music rights holder cannot monitor, analyze, and act on all of the opportunities that any song might encounter—be it a viral TikTok video, tour announcement, playlist feature, new release, a NetflixNFLX -2.6% show placement, or seasonality like Christmas. The music sector, traditionally slow to adapt to seismic shifts, faces a pivotal moment. To adequately champion catalog music, industry stakeholders, particularly record labels, must fundamentally reassess their operational strategies, focusing on resource allocation and recalibrating their expectations between immediate and long-term returns.
A record label's mindset and operational structure was originally sculpted by decades of controlling music distribution and, by extension, audience attention. Prior to Limewire, iTunes and then streaming services like Spotify, record labels had no competition in controlling the way we listen to and buy music. Historically, labels' financial strategies and resource allocation have been centered around upcoming releases—whether that’s the launch of a new track or the reissue of classic albums. Today, nothing has changed. Financial resource allocation within these labels continues to be rigid, predetermined by annual budgets earmarked for specific artist releases. Modern times demand a more agile approach to investment in catalog music, proposing the establishment of non-recoupable funds or co-op investment pools. These would allow for real-time investment in catalog assets, a necessary evolution to keep pace with how music is consumed and discovered today. Unfortunately, the current setup, geared solely towards front-loading investment in anticipation of immediate returns from new releases, hinders the ability to capitalize on unforeseen opportunities that catalog music presents.
Shifting from a short-term return expectation to a long-term vision is crucial for the industry. Momentary opportunities across catalogs that warrant a response are not always seismic. For developing or older songs, an increase in 900 streams from women, aged 18-24 in Toronto post a concert or artist birthday arguably warrants a targeted spend to identify and retain these new audiences for future returns in the long term. The practice of allocating substantial budgets towards marketing campaigns with the anticipation of immediate ROI does not always align with the nature of catalog music marketing. Unlike new releases, catalog music can sometimes benefit from smaller, data-driven, hyper-targeted campaigns that may not yield immediate returns but contribute to a gradual increase in revenue over time. Catalog music's ROI develops over time, necessitating a shift from a blockbuster, front-loaded marketing approach to one that values incremental gains across a broad spectrum of assets. This evolution in mindset and operational strategy is imperative for record labels to start moving in this directly and apply where they can.
PROMOTED
Westcott Multimedia, a data company that optimizes when to spend marketing dollars across streaming media assets, did preliminary research on how long it would take to see a return on investment in digital ad buying. The results of the research were based on data from deploying over 80,000 automatic campaigns across Instagram and facebook. The study determined that if a label were to deploy 10-30 campaigns per catalog song per year - given that there was enough attention across these songs to warrant that spend. The label would see a return on their investment on average within 12 to 24 months. Faster returns are absolutely possible, but on average it takes time to see incremental lift across an entire catalog.
In order for catalog to be properly supported, the mindset of music rights holders needs to continue to evolve. Instead of solely focusing on promoting new or re-issued music with big budgets and expecting immediate returns, there needs to be an increase in attention paid to their vast collection of older songs. This involves using smarter and more consistent marketing efforts at the right time that may not pay off right away but will gradually increase earnings over time. This approach requires the adoption of automated and AI driven tool sets in order to handle the sheet volume of catalogs out there on the internet today. In addition to a willingness to invest in the long-term potential of music, rather than just immediate returns.
