Merlin member survey 2014: New Data Shows Independent Music Is Helping Drive Streaming Market

Merlin, the global rights agency for the independent music sector, has today published new data that highlights the value of independent repertoire across leading streaming services, alongside results of its annual member survey - tracking developments in their digital business.The key findings are:

• Independent music outperforms on streaming services: usage of Merlin members music on streaming services continues to outperform their share of the wider digital market by 10-20%. The trend is even more pronounced on premium paid-for subscription tiers, where usage was almost 30% higher than on free ad-funded tiers 

• Streaming volumes & revenues double: audio tracks by Merlin members were streamed more than 1.4bn times in April 2014 - more than double the streams reported in April 2013. Over that same period, revenues doubled to $89m

• Revenue projections for the next 12 months: Merlin projections show the organisation expects to pay out in excess of $160m to members in audio streaming revenues over the next year

• Streaming drives digital growth: for almost half of respondents, digital income now represents more than 50% of their overall business; for 1 in 5 Merlin members, streaming accounts for more than 50% of this digital income;  73% are optimistic for the future of their business

Repeating analysis from last year, which compared usage of Merlin members’ music on streaming services with their share of wider digital market, Merlin can reveal that independent repertoire continues to outpace the rest of the market on services like Spotify, Beats Music, Deezer and Rdio - eclipsing the independents’ market share of digital album sales by margins of between 12% and 20%, depending on label and territory.Notably, this trend is even more even more pronounced on premium paid-for tiers. Drawing on an analysis of 5bn audio streams (Jan-April 2014) usage of Merlin members’ repertoire was almost 30% higher when accessed on paid streaming tiers compared to free ad-funded tiers.When comparing usage in the month of April 2013 against April 2014, the volume of audio streams reported to the agency by leading music services has increased more than 2.5 times. In April 2014 alone, audio tracks by Merlin’s members were streamed more than 1.4bn times.Year-on-year revenues (May 2013-April 2014) revenues also doubled as against the previous 12 months, to $89m.The agency’s projected payouts to its members for audio streaming revenues over the next 12 months are currently expected to exceed $160m.This data is being released alongside the results of a global survey of Merlin members, tracking developments in their digital business.Drawing on anonymised responses from independent members across 29 countries, the survey offers compelling evidence that the majority of independent labels are continuing to adapt and thrive in the fast-changing digital music market - successfully meeting consumer demand for their repertoire on next-generation music services.Between 2012-13, almost half of respondents (47%) reported increases in streaming revenue of more than 50%. In the same period, despite signs of a slowdown in a la carte download sales – 54% of respondents reported an increase in a la carte sales, compared to 64% in 2011-12 – over 75% of Merlin members reported that their total digital revenues had increased.73% of respondents maintained they were optimistic about the future of their business.When questioned about their current revenues, almost half (48%) of respondents said that digital income now accounts for more than 50% of their overall business. For more than 1 in 4, digital income now accounts for more than 75% of their total business - significantly outpacing the industry average.Streaming and subscription services are also viewed positively for their future growth potential. When asked what was the most significant new opportunity that streaming provided for their business - the prospect of breaking into new or previously untapped markets, especially via paid-for subscription services or bundled telco deals, emerged as common theme.For 1 in 5 Merlin members, streaming already accounts for more than 50% their digital revenues.However, when it comes to video-based platforms, these still contribute less than 25% of digital revenues for the vast majority (84%) of respondents.When asked about the most significant challenges to their business, members responded with variety of answers, including: monopolisation of the market by tech corporates, abuse of market share by major labels, piracy, and managing the transition from downloads to streaming.90% of respondents said that membership of Merlin was important to their business.Commenting on the findings, Merlin CEO Charles Caldas said:“The Merlin member survey and analysis provide a unique and illuminating snapshot of how independent labels are leading the way in the transformation of the global music market. “It is now abundantly clear that the new dynamics offered by streaming platforms are well suited to the independent sector. Consumers have been liberated from the tightly controlled storefronts of the past. As a result, the ability to discover, explore and share new music has been greatly enhanced.  “Independent labels have long enjoyed an increased market share for sales of digital albums, but we are seeing that usage of indie repertoire on streaming services is even more pronounced. And particularly so on paid-for premium tiers that attract the most committed and discerning fans.“The most successful services are those that have understood these dynamics and treat our sector with parity and respect.“This transition is not without its challenges. For many labels, managing the transition from unit sales to access will be a strenuous process, and there are significant concerns about consolidation and predatory behaviour in the wider music and technology sectors. However, we are confident that despite the challenges to the value of their music, independents will continue to thrive in the digital space.“As evidenced by the unprecedented success of independent labels in the charts around the world, consumers are finding a broader, more compelling choice of music than ever before. And pleasingly, much of that is coming from our labels.”ADDITIONAL INFORMATION ABOUT THE SURVEYThe survey was undertaken on an anonymised basis between May and June 2014, and asked Merlin’s members a range of questions related to changes in their digital business between 2012-13 and details of their current digital business, as well as their opinions on current developments in the digital market and the role played by Merlin. Responses were taken from Merlin members across 29 countries.PREMIUM SUBSCRIBERS STREAM MORE INDEPENDENT MUSICAccording to Nielsen’s proprietary data, independent labels already outperform in the wider digital market - in the US, independents' aggregated share of digital album sales is 34% higher than their share of physical album sales.On streaming platforms, these differentials are further enhanced - with Merlin’s internal data showing an additional uplift of between 12-20% depending on the label and where it is based.This trend is even more pronounced on premium paid-for tiers. From an analysis of over 5bn audio streams (Jan-April 2014) usage of Merlin member’s repertoire was almost 30% higher when accessed on paid streaming tiers compared to free ad-funded tiers.90% OF RESPONDENTS STATE THAT MERLIN IS IMPORTANT TO THEIR BUSINESSWhen asked how important Merlin was to their business, 90% of respondents replied positively - with 54% stating that Merlin was “very important” to their business.Accompanying comments included:“The partnership with Merlin is by far the best one our company has ever established. The opportunities we have gained have exceeded our expectations!”“As a Merlin member we are regularly updated on the latest developments and available opportunities. This helps us provide the competitive edge in the market.”“The deal-making expertise of Merlin means that we feel secure in the deals that are made available to our business, and we feel assured that these deals value our repertoire/catalogue in an appropriate manner. Having to negotiate / re-negotiate each deal on an individual basis would be a drain on our resources.”“Merlin is largely our compass for navigating new digital business. Our overall understanding relating to protecting and maintaining proper value of our rights increased dramatically upon becoming a member.”“We believe that Merlin plays a huge role in defending the position of independent distributors and labels on the global music market today, we are really very happy to be part of the Merlin family!”ABOUT MERLINMerlin is the global rights agency representing the world’s most important independent music companies. The organisation acts to ensure its members have effective access to new and emerging revenue streams and that their rights are appropriately valued and protected.Merlin’s membership embodies over 20,000 independent record labels and distributors, representing some of the world’s most important independent artists, including:•       The xx, The National, Vampire Weekend (Beggars Group)•       Tom Waits, Bad Religion, Wilco (Epitaph Records)•       Nick Cave and the Bad Seeds (Kobalt)•       Arcade Fire, She & Him (Merge)•       DJ Khaled, Jim Jones (E1)•       Enter Shikari, Editors, Ghostpoet, Soulwax ([PIAS])•       Animal Collective, Arctic Monkeys, Franz Ferdinand, Anna Calvi (Domino)•       Prodigy, Marilyn Manson (Cooking Vinyl)•       DJ Antoine (Kontor)•       Armin van Buuren, Hardwell (Armada)•       Chuck Prophet, Josh Rouse (Yep Roc Records)•       Kid Koala, Amon Tobin (Ninja Tune)•       Bob Sinclar (Tommy Boy)•       Grizzly Bear, Boards of Canada (Warp Records)•       Ani Difranco (Righteous Babe)•       Sharon van Etten, Bon Iver (Secretly Canadian)•       Hercules and Love Affair, Space Cadets (!K7)•       Dan Zanes, Sonny Landreth (Virtual Label)Merlin’s members command around a 10% share of the global and US recorded music markets. Since commencing operations in May 2008, Merlin has struck deals with a wide variety of digital services including Spotify, Beats Music, Google Play, Rdio and Deezer and reached a number of high value copyright infringement settlements on behalf of its members with, amongst others, Limewire, XM Satellite Radio and Grooveshark.Billboard included CEO Charles Caldas in its International Power Players 2014 list.In March 2013, the organisation’s chief executive, Charles Caldas, was named winner of the IMPALA Outstanding contribution award, which recognised his dedicated work launching and growing Merlin into the virtual fourth major in the digital space.In February 2013, Merlin was named among the world’s ten most innovative companies in music by Fast Company magazine.For more information visit: www.merlinnetwork.org