'Despacito' Effect: Behind This Year's Latin Music Revolution

 John Parra/Getty Images
J Balvin performs at Miami Bash 2017 at American Airlines Arena on April 23, 2017 in Miami.

"Despacito" and "Mi Gente" are leading a surge of Spanish-language songs on the charts as mainstream artists and labels get in on the action.

Latin America was hit harder by piracy than nearly any other music market, seeing record sales decimated in the early 2000s, but Universal Music Group ­nonetheless decided to up its ­investment in the battered region about a decade ago. Just as Spotify was launching in Sweden, the record company beefed up its digital teams from Mexico to Brazil, invested in brand ­partnerships, laid groundwork for Latin festivals and launched a ­management division to develop Latin stars.

Now, those bets made in the bleakest of times are paying off, as two of the acts that UMG co-manages -- Luis Fonsi and J Balvin -- reign supreme on Spotify's global ­streaming chart, which is now fed by over 60 ­million paying ­subscribers. Fonsi's "Despacito," featuring Daddy Yankee and remixed by a team including Justin Bieber, had been Spotify's No. 1 since late April, but the rise of Balvin and Willy William's mostly Spanish "Mi Gente" to No. 1 on Aug. 1 -- ­without the remix of a mainstream pop star -- is an even clearer sign that Latin music's fan base has expanded far beyond the region's borders.

"'Mi Gente' has gone so far [almost] 100 percent in Spanish -- that's what's really special about it," says Alejandro Duque, GM for Universal Music Latino, Machete and Capitol Latin. "Before, Latin music revenue was concentrated in Spanish-speaking markets."

As Balvin, a 32-year-old from Medellín, Colombia, travels the world on his Energia Tour this summer, there are seven predominantly Spanish-language tracks on the Billboard Hot 100 dated Aug. 12, including "Mi Gente," a remake of William's "Voodoo Song," owned by Scorpio and sublicensed in some territories by UMG. Comparably, in all of 2016, just five Spanish-language songs graced the chart in total.

RCA is working a Spanglish remix of Enrique Iglesias' "Subeme la Radio," featuring Sean Paul, to top 40 and rhythmic radio, while there's also a new Balvin-assisted Latin remix of French Montana's top five Hot 100 hit "Unforgettable," ­featuring Swae Lee. Other ­mainstream acts are piling in, with Camila Cabello issuing "Havana" in August, Jax Jones releasing a Brazilian Carnival-inspired video for "Instruction" (featuring Demi Lovato and Stefflon Don) and Dillon Francis working on several Spanish singles that could appear on an upcoming album.

"How crazy is that?" says MLKMN, a Mexican rapper who collaborated with Francis earlier this year and helped design the smiley-faced, lightning-eyed emoji that decorates Balvin's merch.

Latin music crazes have come and gone, but with streaming now ­driving the industry's growth and Latin fans proving to be some of the most engaged music ­streamers on the planet, the ­market looks ­increasingly promising. Though Latin America generated just $598 million of the world's $16 ­billion in recorded-music ­revenue in 2016, according to IFPI, the growing ranks streaming Latin tunes from other countries are "even getting the U.K. labels to reach out and ask for collabs -- that's a first," says Lorenzo Braun, senior vp/GM of Sony Music U.S. Latin.

Streaming is both revealing new pockets of Latin music fans ("Despacito" is huge in Japan) while squeezing revenue from known fans who hadn't ­necessarily been paying for music before. While paid services generate the ­highest per-stream ­payouts for labels, even ad-supported, free ­services such as YouTube are ­monetizing ­listeners who in the past made due with pirated tunes. Earlier in August, "Despacito" became YouTube's most-seen video of all time, but there were four other Spanish-language videos among the top 10 and 27 among the top 100 for the week of Aug. 4.

"Streaming is helping great music come from anywhere and translate everywhere," says Stu Bergen, Warner Music Group CEO of international and global ­commercial services.

Daddy Yankee says that before streaming took off, mainstream ­executives "couldn't understand why we sold [out] arenas around the world," with U.S. sales so slim. "Now, we can finally see the global traffic of people that support us," he says.

Indie publisher Pulse Music has made inroads into the Latin market during the past 18 months, ­signing writers ­including MLKMN and Marty James, who ­collaborated on the English ­translation of the "Despacito" remix. But Pulse ­president Maria Egan says she's more focused on "music that makes a global impact" rather than ­traditional Latin fare.

"Thanks to 'Despacito,' " says Fonsi, "all eyes are not only on me, but Latin music in general."

This article originally appeared in the Aug. 19 issue of Billboard.