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Yesterday: The Beatles and the Economics of Music Catalogue

Photo of Zach Fuller
by Zach Fuller

The release of Yesterday this week, a film about an aspiring musician who one day discovers he is the only person in the world who remembers The Beatles is an interest test-case for catalogue in the streaming era.

Music catalogue (music older than 24 months) was previously the biggest money-spinner in the music industry from the CD-era onwards, where the high-margin product and monopoly on distribution meant the business could reap huge profits. Indeed, perhaps the epitome of this era was The Beatles 1 compilation, released in 2000 with no new music and yet sold over 31 million copies.

These days are gone, and now the option of compilations with no new music is not applicable in the all-access streaming era. And labels are still grappling with how to make catalogue continue to pay in this landscape. Queen’s catalogue enjoyed a healthy invigoration post-Bohemian Rhapsody, as has Elton John’s since the release of Rocketman. While not a biopic, the release of Yesterday is set to be another test case for this theory of how catalogue operates in the post-streaming era. Indeed, posters unrelated to the film highlighting The Beatles’ availability on streaming platforms already adorns the London underground.

The catalogue question can be defined in terms of return-on-investment a popular artist has already, while the pay-off is likely to be smaller than a breakthrough act. However, the upending of the discovery model means the following are foreboding for the future of catalogue:

  • The framework for catalogue discovery has shifted: In the era of music scarcity, many were introduced to older music because of their parents’ record collections. Classic acts also enjoyed career renaissances due to general media scarcity, such as when The Monkees’s show re-ran in the eighties and facilitated a successful reunion tour. Now, consider that kids are no longer growing up in that context; their parents do not have any of those records in the house and they have access to everything – there is no limit of music in the house. They can go off and discover whatever they want and there is far more new music being created presently than in any previous era, with so much of it targeted at exactly their demographic . These younger consumers have very little motivation to go back to catalogue. They are also growing up in a world where their attention is cannibalised by everything from Snapchat to Netflix to YouTube. Prior to the 1980s, music used to be the only on-demand form of entertainment in the home, when TV was tied to a linear broadcast and home video and gaming systems were not yet mainstream. That is not to say music no longer holds the same emotional value, but that it faces far greater competition for attention. Now that streaming directly monetises attention and consumption rather than sales, this is a crucial distinction for revenue opportunity. Labels hope films like Yesterday therefore provide the same boost for streams that a compilation previously could.
  • Streaming’s blend of retail and radio favours frontline: With the music industry having changed its perspective on Spotify’s ad-supported tier and now viewing the medium as a replacement for radio rather than something that cannibalises sales, ad-supported revenues are now in a position to thrive. Ad dollars, while often lagging behind consumer adoption – especially in emerging markets and as streaming services build up ad sales capabilities and ad buyer markets, are, at their most basic, designed to follow the attention spans of those whom advertisers believe will be receptive to their product or service. Now that these revenues will be flowing into the music and podcast sphere via streaming services, those that will benefit are the ones who can capture the attention of their audience. Given radio’s emphasis on the new(ish), as streaming transitions to look a lot more like radio, expect frontline to be the core beneficiaries. Hits become even bigger money-spinners, but much of catalogue will not be so fortunate – save the super hits.
  • The most popular playlists currently emphasise the new: With playlists emerging as the lingua-franca of streaming, it is not surprising that when we observe the most streamed tracks on Spotify, there is a disproportionate skew towards recently released music. Along with no ads and offline playback, all the best new music is one of the central value propositions for paid streaming. New is also accentuated due to playlists often serving a promotional purpose for new acts, as opposed to retrospective functions. This is illustrated in the fact that 13% of all tracks on the Today’s Top Hits playlist were added the list on the day of release. So even at this frontline end of the scale, brand new is emphasised over new. In an industry that has historically offset the 1-in-10 hit rate through monetisation of its proven back catalogue of successful artists, this has drastic ramifications if labels can no longer rely on the revenues catalogue previously delivered.

Yesterday therefore provides an interesting test-case for how much a film can be based around an artist’s music as opposed to a biopic. Does the association point the way towards music-based film financing (profits share from streaming bump?), or are the overall consumption trends of streaming too far in catalogue’s favour to make a meaningful difference? It therefore might take more than a biopic for catalogue to get back to where it once belonged.

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