Revenues from catalogue sales have long underpinned the major record label model, yet this framework is coming to an end. Until breaking a new act, A&R typically operated at a loss whilst catalogue represented a growth fund from which labels invested in future talent. The positive side of this was that it facilitated an appetite for risk in emerging artists, yet this model stands at a crossroads where catalogue sales, in the traditional sense, are going to fall. Younger music consumers have not grown up buying albums and are spending less time both listening to albums and listening to individual albums multiple times. As a result, the foundations for deep diving into catalogue are not being set up for them, with streaming engendering audiences to focus on the new. Add Gen Z’s tendency towards consuming, at speed, larger volumes of (usually social) content, and what you have is the catalyst for a reassessment of how the economics of the entire recorded music business works. Using proprietary MIDiA Research data, this presentation will take a look at how the old model worked and discuss how it is being threatened by streaming.

1. MIDiA Research
Zach Fuller
May 2018
The Decline of Catalogue
http://midiaresearch.com

3. http://midiaresearch.com
1. Introduction
2. Death of the Album
3. Impact on Catalogue
The Decline of Catalogue

4. MIDiA Research is a research, data and analysis
service focused on the intersection of media &
technology. Our reports leverage proprietary
consumer and market data (including quarterly
Canadian consumer data
I head up Media analysis at MIDiA Research
covering monetisation trends and
developments across digital media
MIDiA Research clients pay a one-off
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6. 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983
Number of Disco songs in Billboard End of Year 100
Number of Disco Songs in Billboard Top 100, End of Year
Global Album Sales (Volume in m) 2010-2017
Source: Billboard Charts

7. Donna Summer releases
‘I Feel Love’

9. http://midiaresearch.com
1. Introduction
2. Death of the Album
3. Impact on Catalogue

10. ‘I Let the Music
Find Me’ – Julie
Adenuga, Beats 1

12. %ofconsumers
10%
12%
13%
5%
2%
1%
7%
16-19 20-24 25-34 35-44 45-54 55+ Weighted
Average
Source: MIDiA Research Brand Tracker (09/17), US, Canada, Australia and UK n = 3,000
Younger Audiences are the Highest Consumers of
Curated Playlists
Playlist consumption on streaming service by age

13. 1133 1111
1041
951
859
795
672
587
2010 2011 2012 2013 2014 2015 2016 2017
Album Sales (Volume)
Album Sales in Volume Has Drastically Declined As
Streaming Rises
Global Album Sales (Volume in m) 2010-2017
Source: IFPI

14. Music Fans are Abandoning New Artist Albums, With Older
Physical Buyers Coalescing Around Old Favourites
Selected Catalogue Metrics for Artist Albums and Streaming’s Contribution to Charts by Format, UK Only, 2016 and 2017
58.2% 60.5%
41.8% 39.5%
2016 2017
CATALOGUE SHARE OF
ARTIST ALBUMS (ALL)
% total revenues
STREAMING CONTRIBUTION TO
CHART TOTALS
Source: MIDiA Research / BPI
58.2% 60.5%
41.8% 39.5%
2016 2017
35%
47%
82%
90%
2016
2017
Singles Albums
CATALOGUE SHARE OF ARTIST
ALBUMS (PHYSICAL)
<24 months 24 months +

15. 134.8
71.5
30.5
24.9
18.8
10.6 9.7
2.9
2010-2015 2000s 1990s 1980s 1970s 1960s 1950s 1940s
Revenue
Streaming Revenue Per Decade Drastically Declines After
the 2000s
Revenue in millions (USD) of the UK Streaming Market Per Decade
Source: BPI

18. http://midiaresearch.com
1. Introduction
2. Death of the Album
3. Impact on Catalogue

19. Superstar Catalogue
1% c.250,000
Core Catalogue
20% c.5,000,000
Full Catalogue
100% c.25,000,000
Frequent Catalogue
5% 1,500,000
Catalogue is a Superstar Economy
Less than 1% of a label’s catalogue makes meaningful revenue
Source: Spotify, RIAA

20. 10
2
CD Compilation, 2003 Spotify Most 5 Most Streamed
Bruce Springsteen Compilation Revenue (m USD) in 2003 vs 5 Most streamed tracks on Spotify 2018
Premier Catalogue Struggles To Deliver What It Used To
Source: Spotify, RIAA

21. Streams Required To Generate Equivalent Revenue From A Single Paid Download
137
334
Equivalent streams required to
generate average artist royalty for a
paid download
Equivalent streams required
to generate label revenues
for a paid download
Radio = 5,500
listeners
Streaming Falls Short Against Retail Revenues But Holds
Its Own Against Radio

22. Total
$0.21
Label
$0.17
Artist
$0.03
Publisher
$0.04
Songwriter
$0.03
Streaming Does Not Directly Replace Retail
Average Royalty Revenue Per Album Per Streaming User
Source: MIDiA Research Streaming Income Model

24. Conclusions
• The Catalogue Transformation Will Not Be
Linear
• Independent’s Will Feel This Shift the Hardest
• Artists Must Look at What Replaces the Album

25. Contact: Zach Fuller
Phone: +44 (0) 7944 56 38 57
Email: zach@midiaresearch.com
Web: http://midiaresearch.com
Blog: http://midiaresearch.com/blog
Thanks!