Take Sony Music Brasil. When Paulo Junqueiro took over Brazilian operations in 2015, 60% of the label’s sales were still physical. The shift to digital was so fast that a year later, he outsourced all business related to physical sales. “Of course, it wasn’t our choice. It was the country itself that suddenly dove into the digital era,” says Junqueiro. “Artistically and musically, it was a difficult shift.” Today, physical sales represent less than 1% of Sony’s total revenue.
The label also had to rebuild its roster with artists who would reflect Brazil’s growing appetite for the homegrown, backcountry music known as sertanejo and urban funk, a kind of hip-hop born in the favelas. Now, with top sellers like sertanejo duo Diego & Victor Hugo and funk sensation Dennis DJ, Sony has become the biggest label in the country, competing with Universal and Warner as well as Brazil’s own Som Livre. “Around the world, everyone at Sony is looking at us for what to do next,” says Junqueiro.
As in the rest of the world, streaming platforms saved Brazil’s music industry from an untimely death. Here, however, that happened at hyper speed. A protracted economic slump had turned traditional music products into luxury items few could afford. A so-called “lost generation” turned to YouTube and online piracy to get music for free.
During that time, YouTube became Brazil’s biggest music platform in terms of audience. (It still is.) Although ad-supported streams only represented 8.7% of the country’s total digital music revenue in 2018, according to IFPI, the site has given “a voice to [artists] who were marginalized, paving the way for funk,” says Leo Morel, director of market intelligence for distribution platform iMusics.
Starting in 2013, streaming platforms Deezer, Napster and Spotify finally provided lucrative alternatives for recording companies. “Brazil shows that you can transition from an economy used to getting music for free into a growing industry of subscriptions,” says Price.
When iTunes reached Brazil in 2011, only those with foreign credit cards could access it at first (a local version arrived later), limiting its impact on the market. Streaming companies like Deezer, meanwhile, formed partnerships with mobile operators. “It gave us immediate access to 60 million clients,” says Bruno Vieira, director of Deezer’s Brazil operations.
Last year, according to IFPI, streaming was the biggest source of music revenue in Brazil -- and unlike in other countries, local artists dominated. “It’s a continuing opportunity,” says Vieira. “A market that cares about music and is very connected to smartphones and still has a lot of room for growth."
The Brazilian music market’s decade of decline prompted major labels to reduce their stakes, but it created an opportunity for indies like Som Livre. “When big labels sold operations and canceled contracts, we invested,” says Marcelo Soares, Som Livre’s president and one of the first executives to identify sertanejo’s potential.
“All these artists had developed big followings in the countryside, and yet it was ignored by the market,” he says. No longer: While Anitta is Brazil’s best-selling musical export, more than half of 2018’s 10 most-streamed songs at home were sertanejo. All of them were by Brazilian artists.
This article originally appeared in the April 20 issue of Billboard.