WAV & Asia: The New Way to Discover & Develop Artists

Loud Records founder Steve Rifkind and Former LINE CEO Jeanie Han have started a new company called WAV. The curated app focuses specifically on hip-hop and dance music (for now) and soft launched earlier this year an interactive video platform for creative partnerships with artists, labels and press outlets. The app will help develop and produce exclusive video content and in these early stages has already collaborated with Skrillex's OWSLA label, The Fader, Hip-hop DX, Joey Bada$$, BIA, Krewella and more. While the company is focused on being a platform, Rifkind has even bigger plans in running a record label component with the intention of using the budding WAV ecosystem to lead its A&R and promotion efforts. 

According to Rifkind, "I think the label business and the music business need to change...[It's still] the same thing I was doing 25 years ago... These record companies aren't developing artists anymore. They haven't developed artists in years and the first thing that they cut is video budgets".

Rifkind also went on to talk about the Asian marketplace, "...And then with our parent company, Naver that's the biggest tech company in Korea, we have this network of consumer-facing internet companies: From Naver, the search engine, to LINE. We have Snow, which is like the Snapchat of Asia, and we have the iTunes equivalent, we have Amazon equivalent, YouTube equivalent, all that in Asia and help them get introduced to the Asian market is a huge benefit that no one else can do. Literally, Facebook and Google can't even help you in Asia". 

Let's focus on the Asian market a bit. Rifkind's partner, Jeanie Han, has assisted WAV with having some of these biggest tech companies not only in Korea but in Asia as a whole. China being the biggest country (in terms of population) in the entire world, that is one hell of a market to have access too. China currently has over 1.36 billion people but still never seems to in the top ten of music industry markets. In 2015, they ranked 14th and in 2016 they reached 12th. Recorded music revenue grew 20.3% and the country had a 30.6% rise in streaming services. Tencent Holdings, China's internet giant, owns QQ Music, Kugou, and Kuwo, all leading streaming services. Tencent Entertainment group has more than 15 million subscribers and has a market share of over 70%.

Tencent Music Entertainment Group Vice President, Andy NG, says, "We are all educating people to accept that content has a value and we are making progress. Young people in particular are more willing to pay for a music sercie, they are happy to spend a few dollars supporting artists they truly admire".

What does this mean for WAV? They hit the jackpot! Although China has never made the top 10, the potential is definitley there and the focus on the market is there. WAV has access to billions of Asia's people that the other industry giants do not have and with the way the market is rising they are definitely going in the right direction. Tencent will either be its competition or its partners. I would like to think having the streaming giant as a partner would be wise but they also have a whole lane to carve out for themselves. What do you think would be the best route? Let me know in the comments.

State of the Industry

In 2016, the worldwide recorded music showcase grew by 5.9%, the speediest rate of development since IFPI started following the market in 1997. A second consecutive year of worldwide development for the industry resulted in income greater than the majority of markets, including nine of the main ten. This development, be that as it may, should be seen with regards to the industry losing about 40% of its revenues in the former 15 years.

Streaming has been the driver of this development, with revenues increasing by 60.4%. With more than 100 million paid subscriptions, streaming has surpassed expectations. It makes up the larger part of digital revenue, which now represents half of total industry revenues.

The global digital market is currently seeing major competition, with streaming services developing and expanding their offerings around the globe. Instead of tearing up the current streaming base, the advancements are expanding it. This is giving fans a more elaborate experience and sharing streaming with new markets and potential/new consumers.

In this long-term transition, record companies are seeing this time as the beginning of a new chapter recorded music. We have seen a multitude of changes that have cast some fear due to loss of sales or where incomes are coming from. However, the labels are still committed to investing in music and artists. Now they are driven by the need to deliver music to fans in more varied ways.

The music industry is now attempting to change over the positive income slant presently being experienced into sustainable growth. To accomplish this, music must be protected in a growing digital space. The market 'value gap' must be settled and fair revenue must come back to the individuals who put resources into the industry and making music.

Let's look at the formats and how they measure up to each other. We can see significant changes over the last 10 years. 

PHYSICAL FORMAT 

Physical format incomes declined by 7.6%, a higher rate than the earlier year, which saw a decay of 3.9%. The physical segment still records for 34% of the worldwide market and is especially critical in driving nations, for example, Japan and Germany. 

DIGITAL REVENUES

Digital revenues rose by 17.7% to US$7.8 billion, driven by a sharp 60.4% development in streaming income – the biggest development in eight years. This more than offsets a 20.5% decrease in advanced download income. Streaming now makes up the greater part (59%) of advanced incomes. Surprisingly, digital incomes make up half of the offer of aggregate recorded music industry incomes. In 25 markets, digital incomes now represent more than half of the industry. 

PERFORMANCE RIGHTS

Performance rights income grew by 7.0% to US$2.2 billion in 2016. This revenue stream represents 14% of the market yet remains fundamentally underestimated. 

In 2016 the US, France, and the UK were the three biggest execution rights markets, ahead of the underperforming, Germany and Japan. The business is centered around expanding performance rights revenue in these and other key markets, through obtaining satisfactory public performance rates in Germany and acquiring full performance rights in Japan, China, and the US. 

Tending to the weaknesses in performance rights legislation overall turns out to be much more pressing as the utilization of music is by and large moving far from ownership and towards services that offer consumers access to music. Provided fair market conditions are achieved across territories, the IFPI trusts that the worldwide execution rights showcase still has noteworthy development potential. 

SYNCHRONIZATION REVENUE 

Synchronization revenue grew by 2.8% compared to the 7.0% rise in 2015. It kept up its 2% offer of the global market.

334.2% - Africa as an Emerging Market

With increased smartphone penetration and the advent of streaming, major entertainment companies are looking at Africa like the gold mine that it is. Adam Granite, President of Northern & Eastern Europe and Africa at Sony Music Entertainment, says: I think what really excites us is the fact that we’ve not really turned on the emerging markets when it comes to paid streaming, and when you start to do the math, when you look at some of those countries with mass populations, that’s very exciting.” South Africa streaming revenue increased an amazing 334.2% last year. Although the physical market remains important in the country, there are already over 250,000 paying subscribers on streaming services and it is expected to grow.

“With Nigeria and West Africa, we think there’s a huge opportunity for our catalogue there. We also firmly believe there’s going to be a global star that emerges from Africa. There’s huge potential for our catalogue to sell there, of course, but we believe there is repertoire, specifically from Nigeria, that can break internationally,” Says Granite. Nigerian artist WizKid was featured on the biggest selling track of 2016, Drake’s ‘One Dance’ and currently has a single called ‘Come Closer’ featuring Drake that has been circulating the airwaves, streaming sites, etc. Many artists have been releasing music independently and it is grabbing the attention of A&R’s worldwide. So expect to hear more of those new beats and rhythms, they’ll be controlling the summer.