Aug 30th | Is streaming headed for a crisis? WTF is happening in Italy?

Hey everybody! 

Welcome to Indie Insider. The weekly news bulletin from me, Calvin Windschitl—CEO of indie music’s favorite royalty processing company, Habitat Financial , and co-founder of BonFire Records . This week we’re discussing what a slowdown in paid streaming subscriptions in the US means for the rest of the industry, how music consumption in Italy is changing, and if Turntable Labs’ new app, Hangout, will finally be able to crack the code for social music listening online. 

Before we dive into those stories, I want to try something new this week. If you’ve been reading, and enjoying Indie Insider, I’m asking you to do me the favor of sharing it with someone else who would benefit from, or just enjoy reading my weekly ramblings. So, if you’re reading this on LinkedIn, please go click that re-share button and send it to your friend (bonus points if you repost it). If you’re reading the email version of the newsletter, hit that forward button, and send it to a colleague. If you’re tuning in to the podcast, give it a re-share on your IG story!

Ok, onto the news.

Paid Streaming Adoption Slows in the US

According to Recording Industry Association of America® (RIAA) 's H1 2024 report, the number of paid-tier subscribers on streaming services only grew by 2.7% YoY in the first half of the year in the US. That’s a 2.5M user net increase YoY as compared to H1 2023 which saw a 6.6M user net increase YoY. Folks, it’s official, paid streaming growth in the US is slowing and if we are being honest with ourselves, it reaching its point saturation. So, what does this mean for the industry?

Firstly, the US is only one part of the global music market. There is plenty of opportunity for growth outside of the US. Secondly, streaming revenue grew by 5.5% YoY in H1 2024 and as I’ve mentioned in previous newsletters, music streaming subscriptions appear to be very sticky. I’d wager there is plenty of room for further growth simply by increasing the price of subscriptions in the US. We are already paying our artists too little, let’s see if the market will support a $15/month Spotify individual plan.

The other important point here is that revenue from physical formats grew a whopping 12.7% in H1 2024. Vinyl as a subset grew 17%. Recorded music revenue may continue to grow even once we hit the streaming saturation point here in the US. 

What does this mean for artists? Honestly, not all that much. There are much more important elements in play that will impact your careers e.g. generative AI, cost of touring, changing listener behavior. The only recommendation that I can draw from this is to invest in vinyl if it makes sense for you. Fans are spending more and more money there and the margins are fantastic.

Turntable Labs to break into social-listening space with $8.2M seed round to support Hangout development

Joseph Pearla, one of the key figures behind Turntable.fm announced that his new venture, Turntable Labs, Inc has raised an $8.2M seed round to help develop a next-gen social-listening platform that they are calling Hangout . This is their second round of funding in about a year with a few investors returning to get another bite of the action. Turntable Labs hopes that Hangout will be able to integrate video-game-inspired innovations, like interactivity and custom avatars, with web and mobile apps for a seamless experience.

 Last week I covered Discord ’s new partnership with Amazon Music —another big move in the social listening space. It seems like investors and executives are keen on the idea of replicating online the attachment we form with music during organic IRL social experiences.

While I’m personally skeptical that these companies can achieve success from a psychological point of view, I do think there is loads of money waiting to be made by experimenting with different kinds of listener behaviors. The intersection of gaming and music feel like it’s due for a shakeup soon. We’ve seen reports that suggest younger listeners are increasingly interested in interacting with music, but it’s been a half decade since I’ve seen and innovation in that space that really felt exciting to me (for those curious, I’m referring to the Minecraft concerts Coalchella & Fire Festival that a few of my colleagues put on). Perhaps Hangout will be able to crack that open with their new war chest.

Italy experiencing streaming boom with 23% YoY revenue growth

Something interesting is happening in Italy’s music market right now. According to the Industrial Federation of Italian Music, the country has experienced a 23% YoY increase in revenue from paid streaming subscriptions. Not only that, but Italy has seen an explosion of growth in streaming activity. The market intelligence firm GfK Entertainment reported numbers that show the number of streams stemming from Italy are up a whopping 31.7% YoY.

This is an interesting situation where not only are Italians paying more for music subscriptions, but they seem to be listening to more music as well. What could be causing this? One explanation lies in the types of songs that are reaching the charts in Italy these days. All of Italy’s top 10 albums and singles for H1 2024 were recorded by Italian artists. This trend fall squarely in line with the research on “glocalization” from Will Page & Christopher Dalla Riva , and it could also explain in part the boom in Italy. One interpretation of the glocalization research could be that listeners, when given the choice, seem to prefer music in their native language. Is it possible that Italian's are simply more interested in listening to music sung in Italian? I think it is. Italy recently passed a series of tax credits aimed at helping Italian artists produce more music and video content, so watch this space to see if the trend continues.

Alright that’s it for today’s newsletter. As usual, Indie Insider is sponsored by Habitat Financial , the easiest and most affordable way to make sure artists are paid fairly, transparently, and without hassle. Check out Habitat’s royalty processing tools and pricing plans that cater to any sized music business at www.habitat.financial!

Alright, until next week everyone!