Exploration Weekly - Luminate Publishes ‘Mid Year Music Report’ / YouTube Content ID Claims Reach All-Time High / OpenAI Inks 6-Year Deal with Shutterstock

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In this newsletter:

• Digital music consumption rockets as 112,000 new tracks a day are added to streaming services, says Luminate
• YouTube Content ID Claims Reach All-Time High
• OpenAI Inks 6-Year Deal with Shutterstock to Secure ‘High-Quality Training Data’
• SoundExchange Enables Creators To Receive Digital Royalties Through Venmo and PayPal
• ECSA makes recommendations for streaming reform ahead of discussion in European Parliament next week

Music data company Luminate published its ‘Mid Year Music Report’, one of two reports it now publishes each year identifying consumption trends across the music business.

YouTube’s recent transparency report shows the number of Content ID copyright system claims has reached a new high — 826 million claims in just six months.

OpenAI expands its partnership with Shutterstock, signing a six-year agreement to secure ‘high-quality training data.’

Now, the details...

Exploration Weekly - July 14, 2023
Compiled by Ana Berberana

Digital music consumption rockets as 112,000 new tracks a day are added to streaming services, says Luminate

Music data company Luminate yesterday published its ‘Mid Year Music Report’, one of two reports it now publishes each year identifying consumption trends across the music business. And although the report goes into much more detail about the US market, it also outlines several global trends. Among other things, the report confirms that digital music consumption continues to grow, with the global music industry’s trillion streams milestone being reached in March this year, a month earlier than in 2022. And, by the end of June, two trillion audio streams had been delivered across the various digital platforms since the start of the year, a 22.9% increase on the same period last year. When audio and video streams are combined, 3.3 trillion streams were delivered, 30.8% more than in the first half of 2022. Of course, in the streaming domain, from a revenue perspective, subscriber numbers are more important that the total number of streams. Indeed, if total consumption is increasing faster than the total number of subscribers, then – once everything is averaged out – the industry will actually be earning less money per stream. But, you know, more music is being consumed than ever before, and I guess that’s good news in its own right. For the US, Luminate also has stats around sales, both physical and digital. Physical discs and downloads now account for a relatively small minority of US recorded music revenues, of course, but nevertheless album sales are up this year. And an increase in sales is generally more closely linked to an increase in revenue. Across all formats, album sales in the US were up 7.9% year-on-year for the first half of 2022, with all physical formats – so CD and cassette as well as vinyl – seeing increases. Although the vinyl revival remains key in that domain, with vinyl sales up 21.7% so far this year.

YouTube Content ID Claims Reach All-Time High

YouTube’s latest transparency report reveals that the number of Content ID system claims has hit a new high during the latter half of 2022. The advanced copyright tool flagged over 826 million issues, nearly all automated. These claims generate roughly $1.5 billion in additional annual payouts to rightsholders through monetization options. That is the highest figure since YouTube began reporting these figures and a 9% uplift over the same period the previous year when 759 million videos were flagged. This increase in claims happened despite fewer copyright holders actively using the Content ID system, dropping from 4,840 in 2021 to 4,646 in 2022. While anyone can send a DMCA notice to YouTube, most copyright actions come from the Content ID system that can only be utilized by a select group of copyright holders. To protect copyright holders, YouTube regularly disables, removes, or demonetizes videos allegedly containing infringing content based on these claims. The number of claims rightsholders made on YouTube was unknown for years, but this changed two years ago when the platform launched its first transparency report. Since then, the number of claims has risen steadily. YouTube has managed to cast its Content ID system in a different light to rightsholders, allowing them to monetize infringing content instead of merely taking it offline. The concept of monetizing piracy is unusual but has resulted in a healthy revenue stream opportunity; rightsholders chose to monetize over 90% of all Content ID claims. It’s no surprise that rightsholders’ primary goal remains monetization. By allowing creators to match and monetize their content across Meta and YouTube, companies like Identifyy (owned by HAAWK) are focusing on this very aspect and leveraging the advanced capabilities of Content ID. During 2022, copyright holders were paid around $1.5 billion due to their Content ID claims. Since the system launched several years ago, $9 billion in claimed revenue has been paid out to copyright holders. Unfortunately, the revenue opportunities with Content ID have resulted in scammers trying to steal a piece of the pie. In one case, two men set up a company to find and claim unmonetized music via a third-party partner with access to the Content ID system. The scam generated over $24 million in revenue from YouTube by falsely claiming ownership. But the abuse didn’t go unnoticed. In 2020, the US Department of Justice indicted the two men, with the first defendant sentenced last week to more than five years in prison. “We take abuse of our tools seriously — we terminate tens of thousands of accounts each year that attempt to abuse our copyright tools,” the company says. “Sometimes this takes the form of political actors attempting to censor political speech or companies stifling criticism of their products or practices. Other times individuals try to use our copyright processes to bully other creators or to remove videos they see as competing for the same audience.”

OpenAI Inks 6-Year Deal with Shutterstock to Secure ‘High-Quality Training Data’

Shutterstock, a leading content and creative workflow platform, has announced the expansion of its partnership with artificial intelligence pioneer OpenAI. Through a new six-year agreement, Shutterstock will provide “high-quality training data” for OpenAI models. OpenAI has secured a license to access additional Shutterstock training data, including image, video, and music libraries and associated metadata, as part of the expanded collaboration. Shutterstock gains priority access to the latest OpenAI technology and will continue to leverage DALL-E’s generative text-to-image capabilities into its platform. The integration will also provide Shutterstock customers with synthetic editing capabilities, enabling them to create new content and edit and transform any image in Shutterstock’s library “to accelerate ideation and production.” Further, Shutterstock and OpenAI will work together to bring generative AI capabilities to mobile users through Shutterstock’s newly acquired GIPHY platform. “The renewal and significant expansion of our strategic partnership with OpenAI reinforces Shutterstock’s commitment to driving AI tech innovation and positions us as the data and distribution partner of choice for industry leaders in generative AI,” says Paul Hennessy, CEO of Shutterstock. “We’re pleased to be able to license Shutterstock’s high-quality content library. This extended collaboration not only enhances the capabilities of our image models but also empowers brands, digital media, and marketing companies to unlock transformative possibilities in content creation and ideation,” adds Brad Lightcap, COO of OpenAI. “We look forward to bringing the next generation of generative AI capabilities to Shutterstock and GIPHY’s vast user base, further revolutionizing the way people express themselves through visual media.”

SoundExchange Enables Creators To Receive Digital Royalties Through Venmo and PayPal

SoundExchange, the premier music tech organization powering the future of music, today announced the addition of PayPal and Venmo as royalty distribution payment options for registered creators. SoundExchange is transforming how creators receive compensation for their musical work by distributing royalty payments easily and immediately into their bank accounts – one of the only organizations of its kind to do so. Along with Paypal and Venmo, last year SoundExchange began offering registered creators the choice of receiving royalty payments using CashApp and Zelle. “SoundExchange is the only collective to offer creators the option of receiving royalties via mobile payments apps on a monthly basis,” said Michael Huppe, President and CEO of SoundExchange. “We always strive to meet creators where they are and to simplify their payments/compensation/royalties. By adding PayPal and Venmo to our suite of mobile app payment options, we continue to show what’s possible when adopting technologies and tools that streamline the business of music for all creators.” Payment via PayPal is an immediately available option for domestic and international registrants, whether they are paid as individuals or companies. Although SoundExchange offers direct deposits to banks in Canada, the United Kingdom, the Eurozone, and more, there are countries that could not be serviced via traditional direct deposits. Offering PayPal allows international registrants to receive their SoundExchange royalties in places beyond traditional options without requiring a bank account. This mobile payment initiative is the latest instance of SoundExchange supporting creators and moving the industry forward through technology. In 2022, SoundExchange launched a mobile app, a new website, and additional digital tools to support its growing community of more than 650,000 creators.

ECSA makes recommendations for streaming reform ahead of discussion in European Parliament next week

The European Composer & Songwriter Alliance has published a new report called ‘Music Streaming And Its Impact On Music Authors’. It sets out six recommendations for addressing the concerns expressed about the digital music business by those who compose and write the music that everyone is streaming. The ECSA document has been published ahead of a meeting of the European Parliament’s culture and education committee next week which will discuss a draft report produced by MEP Ibán García Del Blanco that is focused on “cultural diversity and the conditions for authors in the European Music streaming market”. Introducing the new report from ECSA, the organization’s President, songwriter Helienne Lindvall, says: “Despite the apparent success of the music streaming market, the composers and songwriters – who are the engines of the entire music industry – struggle to make a living from their craft, with less than €1 out of a €9.99 subscription going to them”. “With this report”, she adds, “we want to provide a vital call to action, with six major recommendations to fix streaming and ensure long-term sustainability for music creators”. The first of those recommendations puts the spotlight on the debate around how streaming income is shared out between all the different stakeholders in the digital music business, including the streaming services, record labels, music publishers, artists and, of course, songwriters. Music streaming is generally a revenue share business, with approximately 50-55% of revenue flowing to the recording rights, and 10-15% to the song rights. Songwriters have long called for a re-slicing of the digital pie so that more money flows to the songs side. In its report, ESCA calls for the industry to “share the streaming pie in a more sustainable manner and value the fundamental role played by music authors in the streaming market”.

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