Exploration Weekly - Netflix Loses 200K Subscribers in Q1 / RIAA & Major Labels Appeal to Keep Mechanical Rate / Spotify Releases Video Podcasts

Aaron Davis -

Netflix posted a loss of 200,000 subscribers in the first quarter on Wednesday with shares of Netflix falling 35.1%. Music companies Spotify, Tencent Music Entertainment, and Cloud Village also saw their own shares fall, leaving investors to question the state of the current streaming market.

The RIAA and major labels filed a motion with the CRB to keep the 9.1 cent mechanical royalty rate on physical and download format sales. It also requested that the CRB extend the response period to 60 days, instead of requiring participants in the proceeding to respond by April 22.

As of yesterday, all creators in the US, Canada, UK, New Zealand, and Australia are now allowed to upload their own video podcasts to Spotify via distribution company Anchor. The streaming service announced that creators will also be able to receive 100% of revenue until the end of this year.

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Exploration Weekly - April 22, 2022

Netflix’s Q1 Shocker Shakes Investors’ Faith in Streaming

Streaming stocks cratered on Wednesday (April 20) as investors grappled with Tuesday’s news that Netflix posted a rare decline in subscriptions in the first quarter. Shares of Netflix fell 35.1%, creating a cascading effect of losses for music companies: Spotify shares dropped 10.9% and Chinese streaming services Tencent Music Entertainment and Cloud Village fell 4.8% and 3.3%, respectively. Paired with a steep decline from a subscriber warning during its Jan. 20 earnings release, Netflix’s share price has fallen 62.5% year to date and stands 67.7% below its all-time high of $700.99 set on Nov. 17, 2021. Warning lights flashed around the business world after Netflix revealed Tuesday it lost 200,000 subscribers in the first quarter — it had forecast a 2.5-million subscriber gain — and expects to shed another 2 million in the second quarter.

Major Labels Appeal to Keep Mechanical Royalty Rate at 9.1 Cents

The RIAA and the three major record labels have filed a motion with the Copyright Royalty Board asking to limit the scope of a recent ruling to reconsider the 9.1 cent mechanical royalty rate on physical and download format sales. It seeks to confirm that when the CRB rejected a settlement between the labels and the NMPA to keep mechanical rates frozen at 9.1 cents for the 2023-2027 term that it only applied to the music of George Johnson. It also requests that the CRB extend the response period to 60 days, instead of requiring participants in the proceeding to respond by April 22. The RIAA joint filing — which includes Sony Music Entertainment, UMG Recordings Inc. and Warner Music Group — quotes the 801 (B) regulations noting that it authorizes the CRB judges to decline to adopt a settlement only for “CRB participants that are not parties to the agreement.”

Spotify’s Letting Creators Self-Publish (and Self-Monetize) Their Video Podcasts

Starting Thursday (April 21), all creators in the U.S., Canada, U.K., New Zealand, and Australia will be able to upload their own video podcasts to Spotify through its distribution partner/subsidiary company Anchor. Spotify says it’s leaning into video because when viewers can see podcast hosts, that “allow[s] creators to connect with their audiences in a much deeper way.” In tandem with opening access, Spotify announced it’s rolling out monetization for video podcasts—specifically subscriptions, which it launched for audio shows last year and through which it will give creators 100% of revenue until the end of this year. (Starting in 2023, it’ll take a 5% cut of subscription fees.) Other features announced today include a partnership with remote recording platform Riverside, which will let creators “record and publish video content for free […] with a quick distribution path to Spotify via Anchor,” Spotify says.

ByteDance Launches New Music Streaming Service in China

TikTok parent ByteDance has reportedly launched a new music streaming service in China, called Qishui Yinyue, according to the South China Morning Post. ByeDance’s entrance into the music streaming sector in China marks the arrival of a new challenger to music platforms run by tech giants Tencent Holdings and NetEase. According to news outlet 36Kr, the music service was dubbed ‘Luna’ internally and was provisionally named ‘Feilo’. SCMP reports further that ByteDance’s new app Qishui Yinyue (meaning “soda music” in Mandarin), “operates in a similar way to Resso”. The app is currently in beta and an invitation code is required to use it.

Post Malone Must Stand Trial in “Circles” Songwriting Case, Judge Rules

Post Malone must stand trial in a copyright lawsuit that claims he failed to credit a co-writer of his hit “Circles,” a California federal judge ruled Monday (April 18). U.S. District Judge Otis D. Wright ruled that producer and songwriter Tyler Armes might ultimately be able to prove his allegation that he played a key role during an August 2018 studio session and deserves co-credit for an early song that later became “Circles.” The ruling only applies to an unfinished “session” song and not to the final “commercial” version of “Circles”. Judge Wright said it was clear that Armes was not involved in the final cut of the song. But that early version formed the basis for that final cut, and a verdict that Armes owns part of the session track would still entitle him to substantial royalties from “Circles.”

GEMA Revenues Grew by 8.4% in 2021 Despite COVID-19 Impact

German collecting society GEMA has published its annual report for 2021, revealing that its revenues grew by 8.4% year-on-year to US $1.12 billion. After expenses, its distributable amount grew by 9.9% to $957.8 million. That’s a bounce-back from the first year of the COVID-19 pandemic, although GEMA warned that “licensing income from music’s public performance and communication again fell significantly short of pre-pandemic levels”. So, 2021 was a better year than 2020, but it’s still a case of partially offsetting performance shortfalls with online collections. “The corona pandemic has accelerated the transition to digital. However, the growth in the online sector can only partially compensate for the losses caused by the pandemic,” said CEO Dr Harald Heker.


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