Thoughts On WMG's Acquisition of Spinnin Records

Warner Music Group has announced they will be acquiring Dutch Dance Label Spinnin Records for $100m. Whilst the label boasts some of the most popular names in Dance Music, such as Martin Garrix and Tiesto, much like the record Neymar transfer we discussed earlier this year, this is as much an investment in digital real-estate as it is for Spinnin’s copyright and management functions.

This is because one distinguishing factor that lifts Spinnin Records’s service far beyond its contemporaries is the success of its YouTube Channel. As of September 2017, Spinnin’s YouTube channel has around 18.3m subscribers. For context, this is the eighth most popular music channel on YouTube, boasting more subscribers than established artists like Ariana Grande and Bruno Mars. For an independent label, this is an astonishing achievement, and one that has been achieved through a strategy that recognised the distinctions in building audience share on the service:

·Early adopter: Spinnin’s channel debuted July 12th 2007 with the upload of The Sunclub’s Fiesta Reloaded. This is over two years before the launch of VEVO in late 2009—the moment which marked YouTube’s move towards legitimacy in the music space. It meant Spinnin Records was able to catch the first wave of early adopters of YouTube’s service, and establish itself as one of the go-to destinations for dance music. It consolidated this position by capitalising on YouTube’s removal of video time limits in late 2010, offering lengthy DJ mixes across various genres, thus pleasing YouTube’s engagement based algorithm and thus likely being pushed to dance music fans across the site.

·Mastering the long tail: What makes the Spinnin Records road to acquisition all the more astonishing is that it has done so without the traditional Indie method of hosting a few big-name acts, which majors subsequently use as an acquihire to bring such copyright under their remit. True, Martin Garrix and Tiesto have been breakout stars but they are hardly cross-genre household names. It is more Spinnin’s consistent releases across all facets of Dance music’s micro-niches (Future Bass, Hardstyle, Progressive House), that has gifted the label’s identity and personality exposure to so many fans. Throw in the factors of Dance music’s popularity renaissance and growth in the US since the mid 2000s, Spinnin Records has capitalised on a fruitful ecosystem for its label’s offering.

The most likely scenario now is that Warner will employ Spinnin’s digital footprint as a funnel for prospective dance acts, where their popularity will be measured on the channel before being pushed across other assets. Following the celebratory narrative of the music industry’s first shoots of growth in decades, this will be an important hedge against the slowed growth, or even decline, that the industry will experience as strong physical markets (Germany and Japan) begin to expedite their streaming transition. ‘Sure things’ are an increasingly scarce commodity in media (Disney’s acquisition of the Star Wars franchise, Adele’s deal with Sony) and this acquisition is just the latest example of the superstar effect driving up the price of digital real estate.