Last week, we took a look at Netflix's recent weak first quarter numbers, as well as projections showing a slowdown during 2021. You'd think that given the COVID disruptions with millions of Americans still staying close to home, streaming video platforms would still be killing it.
Except for one annoying problem:
Netflix is running out of hit shows.
In their most recent financial statement to company shareholders, the corporate team at Netflix went right to the heart of the issue:
“We believe paid membership growth slowed due to… a lighter content slate in the first half of this year, due to Covid-19 production delays.”
In other words, a dearth of hit shows – TV series, blockbuster movies, and compelling documentaries.
To that end, Music Business Worldwide's Murray Stassen made this point in a story last week:
Interestingly, streaming audio services have had a better run during this same period. Stassen says that according to the RIAA, subscriptions to services like Spotify and Amazon Music in the U.S. increased by more that 15 million in 2020.
And revenue followed, up by more than 9% to north of $12 billion last year.
Not too shabby as they say – until you look under the hood.
The lion's share of the U.S. music market is catalog product. Hits Daily Double says “gold” now accounts for two-thirds of the market – and it's projected to run even higher in Q1 of this year.
That genre accounts for only a portion of it. Much of it is newer music from the streaming era. Still, the gold trending is important, speaking to the same phenomenon Netflix, Hulu, Disney+ and other SVODs are witnessing.
A lack of new hits.
It's a problem whether you're running a subscription streaming video platform…or a contemporary music station.
Is it a problem for the music industry – and by extension, radio? Ultimately, yes. Every form of mass pop culture and art needs to feed the beast in order to become – and remain – mass appeal.
And that requires an influx of new hits – movies, Broadway shows (when they come back), and of course, music. Without new artists making new hits, you've got a music business treading water on its equivalent of Seinfeld reruns – Classic Rock and other catalog material.
The TV business cannot survive on programming featuring the same four people gabbing about “nothing” at Monks Cafe any more than radio and records surviving on the Led Zeppelin catalog.
This data suggests a new music drought – at least in terms of emerging, successful mass market artists and songs breaking through. Radio pros have watched Alternative, Top 40, and other formats reliant on fresh new hits atrophy.
So, what's the solution?
Returning to Netflix's dilemma, they're addressing it with new content development. The hope is that as COVID wanes, more and more production studios in the U.S. and around the world will ramp up activity in the coming months.
But it takes serious capital to make this happen. According to Deadline's Peter White, Netflix will spend a whopping $17 billion (with a B) on new content this year.
And that's just Netflix.
So, is there an analogy in the music and radio industries? An injection of serious money – the audio equivalent of what Netflix is laying out – is likely out of the question for record labels (although they enjoyed a successful 2020).
Maybe distribution and marketing have a little something to do with it.
I hear many critics – in the music and radio industry, as well as “civilians” – tell me that new music and new artists aren't as good as they used to be.
That everything today sounds derivative of what came before it. That rampant sampling of gold songs in Hip Hop records speaks to a lack of ingenuity and talent.
Sorry, but I'm not buying that.
An hour on YouTube and TikTok suggests that's not it. There are plenty of multi-talented musicians out there, unable to connect with a delivery method that effectively reaches mass markets.
So, maybe it's not a content or creative problem, but is instead a distribution and a marketing problem.
Before there was the “long tail” of audio streaming, radio and the music industries worked together to build brands and promote hits.
And because everyone listened to the same radio stations across the country, and because most of them were playing similar playlists, we all were exposed to new music and new artists at the same time.
While progressive rock FM stations took big risks in the late '60s and early '70s, the fact is, breaking out in radio has always been a long, laborious process. To get a record added on WABC, WLS, KHJ, or CKLW was like crossing a musical Rubicon.
But once one of these “influencers” committed to a new song and/or a new artist, it wasn't long before the entire country was singing along.
Ask any music fan about new artists they've discovered this year, and you're likely to build a list with few duplicates. That's because we're all streaming different stuff.
More and more, consumers are not looking to the radio to find out about new releases and breakout artists. When we ask radio listeners why they tune in stations, fewer and fewer say a main driver is new music discovery:
Yet, just about everyone still listens to radio. There's a reason why radio's biggest companies are using their national scale to promote their podcasts via their branded apps. The megaphone still works.
As we climb our way out of COVID, the entertainment bounceback promises to be strong. Consumers want to get their lives back, to get out, to start going to concerts again. The second half of this year could be amazing.
But then the systemic problems that have plagued the two industries in recent years – a lack of hits and a screwed up, multi-faceted distribution model will conspire to slow the development of superstars and their musical art.
Radio and records – as we used to say – were stronger and healthier when they worked together and fed each other's seemingly insatiable needs. Is this “a moment” when both sides sat down at the table and reviewed everything – streaming fees, co-promotion, concert and merch marketing, local festivals and tours, web and on-air content, artist and music experiences fans can't get anywhere else.
In our post-COVID world, these are conversations that should happen again.
Just not on Zoom.
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