Inequality, YouTube Growth, and Mercado Libre
Inequality, YouTube Growth, and Mercado Libre
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Today's charts:
How much of your country’s income does the top 1% earn?
— story by Gabriel Cohen
Reggaeton has exploded more than you would think
If Mercado Libre were a country
— story by Cesar Villescas
Make sure you check out the comment of the week at the bottom!
Wealth 💰
There’s no way to sugarcoat it: the pandemic has only worsened the problem of global economic inequality. And perhaps nowhere is this more true than Latin America, which has been named the most unequal region in the world by, among others, the United Nations and IMF.
But while it’s not breaking news that global crises further inequalities and concentrate more wealth in the hands of the rich, it may surprise you to learn where this is most the case.
The Dominican Republic, Peru, and Mexico are all among the most unequal countries in the world by WID figures, with the top 1% of each country earning between 25-30% of the country’s total income.
Yes, you read that right. The richest Mexicans earn over a quarter of the money flow in the country; the richest Dominicans, nearly a third.
The three countries rank only behind Mozambique and the Central African Republic by this metric, but the problem is far deeper throughout the region. Brazil and Chile both occupy painfully high spots as well, with around 22% of each country’s wealth being held by the countries’ richest citizens. This places these two major economies somewhere between Russia and a number of Gulf states that are either run by royal families or engulfed in civil war.
There are some expected results… and some surprises. Uruguay, which has emerged in recent years as Latin America’s success story, is the region’s most equitable society. That makes sense. But El Salvador falls far below its neighbors in terms of the share of wealth held by its richest citizens – a rare bit of good news.
Here at Latinometrics, we’re all about giving flowers to the countries and people growing Latin America, whether that be in Colombia or the Dominican Republic. But growth must include all people, not just the very richest. It can be a challenge to ensure development is sustainable and widespread – just ask recently-elected presidents like Gabriel Boric and Lula da Silva – but the only way the region will grow well is if everyone’s wealth grows with it.
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Music Industry 🎤
Some Latin American artists have seen a rise in popularity unlike anything ever seen since the beginning of the new century. It's challenging to measure all of the plays a song gets nowadays, given the many ways to listen: Spotify, Apple Music, YouTube, SoundCloud, TikTok, the radio, etc. But the fact that LatAm artists on our chart have exploded faster — especially on YouTube — than some of the most famous English-speaking artists is remarkable.
Two factors make this more striking:
More than twice the people in the world can speak English vs. Spanish, meaning a much bigger market for English songs.
By 2020, 74% of Latin America had access to the Internet, while the English-speaking countries (+ Europe, which is very English-fluent) had 90%+ access.
Amazingly, as we showed last week, most of this new LatAm talent has been coming from the tiny island of Puerto Rico.
The epitome example is Bad Bunny, but other artists like J Balvin, Daddy Yankee, and Bizarrap have achieved a similar feat compared to some English-speaking superstars. Bad Bunny created a YouTube account in 2014, and in half the time has reached views superior to Taylor Swift's while approaching Justin Bieber and Ed Sheeran's. Those artists have been on YouTube since around 2006-2007.
If we look at Spotify's current Top 50 Globally, most songs are still from English-speaking artists, obviously. However, we counted Spanish-speaking artists appearing in 14 of the 50 songs — 28% of the total. Latin music is undoubtedly having its biggest moment yet.
Business 💼
If Mercado Libre's users were a country, it would be bigger than all Latin American countries but Brazil and Mexico.
Most recent data from 11/22 of last year shows that Mercado Libre has grown its user base to a staggering 88.3M active users. Most of their users are divided almost evenly among the company's two major lines of business: Mercado Libre, their e-commerce platform with 42.5 million users, and Mercado Pago, their fintech business with 41.6 million users.
Over the past year, it achieved a growth rate of 12.2% for its total active users, with growth across its two lines of business. While e-commerce users increased by 9.6%, the bulk of the growth was driven by their fintech business, which grew by 31.7% in that same period. On Mercado Pago, unique wallet payers increased by 33.6% and investment accounts by 29%.
While these numbers are impressive, they are small compared to the revenue growth they brought. The company posted Q3 net revenues of $2.7B, a staggering 61% growth from the previous year. Similar to their users, both lines of business saw significant revenue growth, with e-commerce growing 33% and fintech leading the charge with an astonishing 115% increase.
Further, Mercado Libre seems to be getting most of its growth from its three core geographic markets. It saw revenue growths of 35%, 72%, and 60% in Brazil, Argentina, and Mexico, respectively. Those three countries represented over 95% of their revenues in that period, meaning that they have been able to further penetrate their core markets to exceptional levels.
Clearly, the company's main growth driver has been Mercado Pago. This line of business has been growing exponentially. It's now on the verge of becoming larger than its e-commerce business. We at Latinometrics predict this will become a reality in 2023 (not a risky bet).
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That’s all for this week 👋
Want more?
The Comment of the Week, from our chart about Puerto Rican artists on LinkedIn taught us where reggaeton actually came from — 🇵🇦:
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