Warner Music Makes Money Moves to Replace R&B With Algorithms

By Sabrina Lynch

  • Warner Music signs Endel AI to a record deal

  • 2018 saw a record high of $534.6 billion on-demand audio streams

In a first of its kind deal, Warner Music Group has signed German technology company Endel to its label, to expedite business growth through A.I. generated music. Streaming now accounts for almost half of all music label revenues, prompting the record company to place big financial bets on Endel. This new tie up will create a stable of tracks from bona fide artists, namely bundles of algorithms to successfully displace artists such as Post Malone and J. Cole from the top of the charts.

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Why This Matters: African-Americans’ choice in music streaming played a crucial role in making R&B/Hip Hop the No.1 music genre in the U.S. Given the commercial power that Black audiences wield over the industry, Nielsen found they spend $173 annually on purchased music. Warner Music Group will greatly benefit from developing tracks that appeal to this demographic so they can cash out in a big way.

Given the commercial power that Black audiences wield over the industry, Nielsen found they spend $173 annually on purchased music

Endel’s investors including Avex Inc and Major Lazer’s Jillionaire will be watching closely to see if personalized songs and soundscapes achieve the success levels of artists like Cardi B, Dua Lipa and Lil Pump.

In general, streaming platforms such as Spotify (SPOT -0.66%) have made music purchases an obsolete source of revenue for Black artists and record companies alike. Album sales in 2018 alone fell by 17.7%  to $141 million, now the tables could be turning with an AI artist putting out hit songs.

Situational Awareness: African American artists have an unrivaled impact on contemporary culture; whether AI will have the same influence remains to be seen. Pitting the coding skills of designers and sound engineers against the talents of icons in jazz, rap, blues and neo-soul is a big undertaking so the dividend payback will take time.

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