Exploration Weekly - Youtube Ad Revenues Jump 13% to $8.7B in Q2 / German Recorded Music Industry Jumps 7.6% During H1 2024 / Spotify Turns in Record Profit in Q2

There is a lot of video content out there, and much of it uses music! Synchronization licensing is the process by which production companies of audiovisual works clear the rights for outside music to use in their videos. Synchronization is a burgeoning corner of the music industry, and for a musician, a placement in a major television show, film, advertisement or video game can boost their career in innumerable ways.

Our guide has been written to provide a comprehensive overview of the world of synchronization licensing.

Check out some of our other guides on music industry topics at Exploration Learn, or subscribe to our YouTube channel for more information.

In this newsletter:

• Youtube Ad Revenues Jump 13% to $8.7B in Q2
• German Recorded Music Industry Jumps 7.6% During H1 2024
• Spotify Turns in Record Profit in Q2, Grows Premium Subscribers to 246 Million
• NBA Basketball Teams Sued by Kobalt Over Unlicensed Music in Social Media Posts
• SoundExchange Files Missing-Payments Suit Against AccuRadio, Seeking Owed Royalties, An Injunction, and More

Alphabet reported YouTube ad earnings of $8.66 billion in Q2, a 13% increase from the previous year.

The German recorded music industry has grown 7.6% in the first half of 2024, though demand for physical media has fallen significantly.

Spotify posted a record profit in Q2 2024, helped by cost-cutting measures including mass layoffs. The company gained 7 million paid subscribers, slightly exceeding guidance, while total monthly users fell short of the target.

Now, the details...

Exploration Weekly - July 26, 2024
Compiled by Ana Berberana

Youtube Ad Revenues Jump 13% to $8.7B in Q2

YouTube’s business is growing. The video streaming service’s parent company, Alphabet, reported YouTube ad earnings of USD $8.66 billion in Q2 of this year, a 13.0% increase from the same quarter a year earlier. The double-digit jump is a far cry from where YouTube was a year earlier, when it was reporting year-over-year declines in revenue. Nonetheless, the latest ad revenue numbers fell short of analysts’ expectations, which were at $8.93 billion, per a survey from StreetAccount, as cited by CNBC. The increase also marks a slowdown from YouTube’s ad revenue growth in the prior quarter, which came in at 20.9% YoY, at $8.09 billion. The “Google subscriptions, platforms and devices” segment of Alphabet’s earnings, which includes YouTube Music and YouTube Premium subscribers, came in at $9.31 billion, up 14.37% YoY. On Alphabet’s earnings call after market close on Tuesday (July 23), Alphabet/Google CFO Ruth Porat attributed the segment’s growth to YouTube TV and YouTube Music Premium. She noted that year-over-year growth in the segment would have been even stronger, had it not been for a price hike to YouTube TV that fell out of the year-over-year calculations in this quarter. “But at the heart of it are people interested in the subscription offerings, and it’s a takeup that’s significant. We are really pleased with it,” Porat said.

German Recorded Music Industry Jumps 7.6% During H1 2024

The German Music Industry Association (BVMI) announced €1.136 billion ($1.05B) was generated from streams, CDs, downloads, and vinyl from January to June 2024. That marks an increase of 7.6% compared to the same period last year [€1.056B ($971.5B) H1 2023]. Though the industry is growing, it is propelled by streaming rather than physical media. Demand for physical media fell significantly in the first half of 2024, dropping 11.9% with CDs down -22.5% and contributing 8.1% towards sales. Vinyl grew at a reserved rate of 5.4% and contributed to a market share of 5.9% in the half. The physical side of the recorded music business now accounts for 14.7% of industry sales, while the digital market (+11.9%) accounts for 85.3%. The BVMI says streaming is the driving force to this growth (+12.7%) while downloads fell (-16%). “2024 is off to a good start, with the industry generating a total of €1.136 billion ($1.05B) in the first six months—7.6% more than in the same period last year,” adds Dr. Florian Drücke, Chairman & CEO of BVMI. “The appeal of streaming services for music fans still continues to grow. Vinyl’s sustained upward trend shows that the physical and digital worlds remain complementary and interact with each other. Fans listen to and use music in all ways, which, accordingly, the labels, as partners of the artists, have an integrated view of, offer and expand in order to constantly expand the digital value creation opportunities in the common interest.”

Spotify Turns in Record Profit in Q2, Grows Premium Subscribers to 246 Million

Helped by cost-cutting measures including a mass layoff, Spotify posted a record profit in the second quarter of 2024 that topped expectations. The music and audio streaming giant gained 7 million paid subscribers in the period, slightly ahead of guidance, while total monthly users fell short of its target. Spotify reported Q2 revenue of €3.81 billion, up 20%, and a net profit of €274 million, versus a net loss of -€302 million in the year-earlier period. The company’s operating costs declined 16% in Q2 due mostly to “a decrease in personnel and related costs and lower marketing spend.” Gross margin for the period was 29.2% (ahead of guidance), compared with 24.1% in the year-earlier period. The record profits come after significant layoffs at Spotify. At the end of Q2, Spotify’s workforce stood at 7,372 full-time employees globally — down from 9,123 at the end of 2023. Shares of Spotify popped more than 12% on the Q2 earnings announcement Tuesday. Spotify’s ad-supported revenue in Q2 grew 13%, reflecting double-digit growth across all regions. Music advertising growth was driven by gains in impressions sold and increased pricing; podcast ad revenue growth was driven by growth in impressions sold across original and licensed podcasts and the Spotify Audience Network, partially offset by softer pricing, the company said.

NBA Basketball Teams Sued by Kobalt Over Unlicensed Music in Social Media Posts

Kobalt Music has sued a stack of NBA basketball teams in the US over allegations they have used music in promotional posts on social media without getting the required licenses. That includes songs controlled by Kobalt and various independent music publishers that it works with, including Artist Publishing Group, MXM Music and Prescription Songs. Each team has been sued separately, though the lawsuits all follow the same template. Each filing insists that the targeted team is “acutely aware” of how intellectual property law works, illustrating that point by listing the trademarks and copyrights the team itself has registered. The lawsuits then claim that each targeted team “utilizes the full extent of legal protections available for its own intellectual property while simultaneously knowingly and willfully infringing on the property rights” of the music companies. Each team “dedicates substantial effort to its social media presence” on platforms like Facebook, Instagram, X, YouTube and TikTok, the lawsuits state. As part of their respective social media marketing campaigns, each team has exploited the publishers’ copyrights “by synchronizing their works with the videos which are intended to promote defendants’ commercial activities” and then posting those videos to a “variety of consumer-facing platforms”. Crucially, defendants did not obtain from the publishers a “license, authorisation or consent to synchronize the works with the videos”. To that end, Kobalt wants every team held liable for copyright infringement and ordered to hand over lots of damages.

SoundExchange Files Missing-Payments Suit Against AccuRadio, Seeking Owed Royalties, An Injunction, and More

SoundExchange, the entity tasked with collecting U.S. recording royalties for non-interactive digital platforms, just recently submitted the complaint to an Illinois federal court. Of course, internet and satellite radio services fall squarely under the non-profit’s operational scope, and unpaid-royalties litigation is ongoing against the likes of SiriusXM and others. Now, AccuRadio is likewise fending off a missing-payments action, which indicates that the nearly quarter-century-old company forwarded the mandated royalties, some of which were “untimely,” as required until 2016. According to the filing party, those “payments slowed and finally stopped in 2018,” or the same year that Spotify listed on the public market. Against the backdrop of a rapidly evolving music landscape, early 2020 purportedly saw AccuRadio and SoundExchange hammer out a deal to account for the allegedly missing payments. But AccuRadio, which says its stations are “absolutely 100% free” for listeners, allegedly “failed to make required payments” under this plan. SoundExchange claims it subsequently audited the defendant’s royalties for 2015 through 2017 and “identified additional royalties due.” Fast forward to late June of 2023, which is said to have brought a forbearance agreement covering the allegedly missing payments. Expected to run into April of 2027, that agreement called for an initial down payment, monthly installments thereafter, and “a single balloon payment” at the relevant period’s conclusion in 2027, per SoundExchange’s synopsis.

Random Ramblings

• Should skipped songs be valued less on streaming services?
• Karol G is the first artist to top Hot Latin Songs, Latin Airplay & Tropical Airplay Charts simultaneously in over a decade.
• Boy, 11, writes his first orchestral piece.
• Eminem charts 16 songs from ‘The Death of Slim Shady’ on Hot 100 & surpasses 100 career hits.