Merlin: Indie Labels Point to Growth Beyond Their Borders as Digital Dominates With 14 Billion Monthly Streams

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The percentage of Merlin members who say audio streams account for the bulk of their digital revenue continues to grow.

Merlin, the indie label licensing and collection juggernaut, is helping its 20,000 labels, imprints and indie distributors grow beyond their home markets.

In a survey of its membership, 42 percent of the responding members said that the majority of their digital consumption revenue comes from outside their home territory, up from 39 percent  in last year’s survey. Overall, 18 percent of Merlin members said that the majority of their revenue, including physical and digital sales revenue, comes from outside their home territory.

Merlin acts as an agent for thousands of indie labels around the world in negotiating licensing contracts with music digital service providers and then collects play data and royalties, which it distributes to its members based on the plays of their music. In its most recently completed fiscal year, Merlin hit the $500 million mark.

In another measurement, Merlin members' streams have grown to 14 billion streams per month in the year ending March 2018, and that’s up from 8.9 billion per month in the prior year. From March 2014 to March 2016, streams grew from 1.4 billion a month to 2.6 billion to 4.9 billion.

“Undoubtedly the most exciting development of recent years is the demand for Merlin members' repertoire in territories previously of only nominal value to independents operating in the Western market place," according to Merlin CEO Charles Caldas as quoted in the Merlin Impact Report, issued to recognize the agency’s 10th anniversary. "In Latin America and Southeast Asia, the phenomenal uptake of audio streaming is fueling an unprecedented demand."

According to the report, Brazil is now Merlin's sixth biggest market, ahead of France, Australia and Canada. The report adds that Argentina, Mexico and Chile are also among Merlin's top 20 highest earning markets.

Furthermore, Merlin anticipates this trend will continue in time fueled by growth in China, as it has recently inked deals with Alibaba, Tencent and NetEase, with independent music set to "follow a similar trajectory in China."

In other findings, Merlin found that its members repertoire performs over 25 percent better in market share on paid tiers versus free tiers. This possibly shows that consumers who are willing to pay for music are not only more passionate music fans but more attracted to music by indie artists and labels than consumers who are casual listeners who'd rather listen via ad-supported tiers.

Further buttressing the importance of the digital format, Merlin says that 69 percent of its responding members say that digital is the bulk of their overall revenue. That’s grown from 67 percent last year, 62 percent in the prior year 2016, 55 percent in 2015 and 28 percent in 2014.

While those numbers refer to overall digital whether it be sales or streaming, Merlin further reports that 68 percent of its responding members say audio streams alone account for the bulk of their digital revenue. Meanwhile, more than 80 percent of responding Merlin members say that video streaming accounts for less than 25 percent of their digital revenue, something that the survey has found every year for the last five years, which the report characterizes as a "comparative lack of dynamism in video streaming."

Overall, the Merlin Impact Report said that 74 percent of the responding members reported revenue growth for their companies, over the prior year; while 78 percent state they are optimistic about the future.