Eleven Music Industry Trends for 2011In changing markets there are always winners and there are always losers - the adversarial nature of capitalism demands it. While it is tempting to lean towards the negative –- to paint an apocalyptic future -- we hope to highlight potential areas of opportunity in tomorrow's music industry.
Trend One | The Three Bears – is the tablet computer… “just right”?
Laptops are too big and bulky, cell phones are too small, but the tablet computer is… just right?
It does seem that tablet computing is device (category) whose time has come. The Sony Reader, Amazon Kindle and of course the apparent “game changer” the Apple iPad point to the future not only of mobile computing – but the very nature of computing. Expect in 2011 to see significant growth in tablet computing as entertainment providers and publishes embrace the immersive/interactive possibilities of tablet computers.
Not convinced? See how entertainment, media, publishing, television, the Internet and social networking are merging (or are converging) in the Sports Illustrated iPad application seen here: http://www.youtube.com/watch?v=ntyXvLnxyXk&feature=player_embedded
Still not convinced? Remember that the iPad apps are effectively the same as iPhone apps. So check out the iPhone app of the artist, Pink - http://itunes.apple.com/us/app/pink/id293680837?mt=8
Here is a perfect example of how individual artists, with or without label support can reach out to fans. Admittedly not everyone has iPhone/iPad production budgets as do Sony Music Entertainment – but already there is a plethora of developers offering band apps for these new devices. Expect to see growth in “band” apps in the future.
Trend Two | Looking to 2012… will David Bowie’s vision be a reality?
In 2002 David Bowie made some insightful remarks on the future of music distribution and copyright.
He said…. 'The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it's not going to happen. I'm fully confident that copyright, for instance, will no longer exist in 10 years, and authorship and intellectual property is in for such a bashing.''
''Music itself is going to become like running water or electricity,'' he added. ''So it's like, just take advantage of these last few years because none of this is ever going to happen again. You'd better be prepared for doing a lot of touring because that's really the only unique situation that's going to be left.
(“David Bowie, 21st-Century Entrepreneur” New York Times -JON PARELES - Published: June 9, 2002. http://query.nytimes.com/gst/fullpage.html?res=9B03E1DA113AF93AA35755C0A9649C8B63)
We are close now to the 10-year timeframe laid out by Bowie, but how close are we to the future he envisaged?
What future copyright?
We do know that CD sales are definitely in decline. Consider the following:
In the United States.. “Growth in digital formats only partially offset a decline of 21 percent in physical formats. The decline in CD shipments accounted for virtually all the decline on the physical side” (News and Notes On 2009 RIAA Shipment Data - Joshua P. Friedlander, RIAA Vice President, Research and Strategic Analysis).
Over the period 2003-2009 unit sales of compact discs in Australia declined by 78%. (ARIA -Australian sales at wholesale value (physical product) for the years ended 31 December 2009)
Music like running water & electricity?
The Internet has truly transformed music distribution and just like just like water or electricity, it does seem that music is becoming a commodity.
Yet under the sustained and multi-faceted pressure of; global economic and population growth, climate change and resource depletion - water and electricity are becoming more expensive, more valuable and more differentiated in quality. Meaning – some power is clean and green some is as dirty as brown coal.
By contrast, music is being devalued and becoming more like a commodity and less like the valuable cultural artefact we know it to be. So yes, Bowie was right is saying music would be like running water, but did he envisage that water would become more expensive and more profitable than music?
Trend 3 | The festival is dead. Long live the festival
David Bowie was right when he said; “You'd better be prepared for doing a lot of touring because that's really the only unique situation that's going to be left”. But how is the live music market shaping up?
It is not surprising that in recent years there has been renewed interest in live music, particularly in music and cultural festivals. The success of festivals like The Big Day Out and Splendour in the Grass encouraged (throughout the 90s and 2000s.) a proliferation of copy-cat music festivals. While a kind of gold rush has ensued, in recent years (in Australia) there has arguably an oversupply of festivals with almost every local council in Australia is promoting a blues, blues n roots, jazz, dance or country music festival plus dozens of new music impresarios launching festivals.
Katherine Feeney and Tony Moore writing for the Sydney Morning Herald recently discuss this oversupply and point to some rationalisation in the live festival market. See their excellent coverage of the issue: http://www.smh.com.au/entertainment/music/big-days-down-and-out-music-festivals-under-threat-20101117-17xhi.html.
"...music is being devalued and becoming more like a commodity and less like the valuable cultural artifact we know it to be."
So in 2012 what will we see? Fewer non-industry players like looking to leverage their brands by producing festivals? Perhaps. Fewer new festivals as nervous venture capitalists pull back from bankrolling festivals? Perhaps. What is for sure is that there will always be interest from bands wanting to get on the bill of the festivals, yet it is clear that their will be fewer festivals.
So the festival market will likely be less buoyant, and as the case with all markets experiencing intense competition rationalization is the result. The festival market as we know it dead – replaced with a new, more commercial rationalized one.
Trend 4 | One social network to rule them all?
Arguably social networking began with MySpace, where individuals and more importantly bands, could crate their own free online presence. In recent years of course, Facebook has become the one ring to rule them all with Google ranking it as the most visited site on the Internet with 600 million visitors per month. (http://www.google.com/adplanner/static/top1000)
Poor old MySpace comes in at the 24th most visited website with only one-tenth the traffic at 61million visitors each month.
Admittedly Facebook does not yet have the level of music promotion tools found in MySpace – but its power as a tool to build a fan base kills MySpace. The question is the same as when MySpace was at its zenith… “Will it (or alternately Facebook) eventually replace the need for bands to have their own website? The answer to who will rule (at least in music promotion) can be found in the following trend number 5.
Trend 5 | The demise of the (bespoke) band website
Traditionally the route in claiming an online space revolved around the bespoke (or purpose built) website.
In such cases website development can been expensive and complex; basically an environment prone abuse by unscrupulous developers and overly expectant clients. Enter social networks and free (and cheap) do-it-yourself (band) websites.
One thing that MySpace and Facebook have taught us is that the while everyone wants a website that looks great (I know that is subjective) – what is more important is a site that is functional, has social networking and is optimised for Google search. In the days before Myspace-Facebook-Google it was assumed that bands/artists would either have (1) a poorly designed and poorly functioning DIY site or (2) an expensive, great looking and highly functional site.
Now bands have highly functional, inexpensive and (generally speaking) aesthetic displeasing sites. But that doesn’t matter to bands/artists – they just want fans, gigs and interested downloader-consumers.
Sorry web developers – into the future bands are likely to abandon bespoke websites in favour of subscription websites like those from Reverb Nation, Bandzoogle Bandcamp or they’ll simply redirect their domain name to their MySpace, Facebook or Wordpress page. In other-words…sites they can easy manage on limited budgets.
Trend 6 | Tooled up for the mash up
In keeping with the trends online, tomorrow’s entertainment consumer will have greater power to pick and choose. A bit of music here, a movie there, a blog here, an online newspaper from over there – all mashed up - converged. This fragmentation of course will present increasing headaches for the print publishing and movie industries who are yet to be exposed to the digital paradigm shift that was required from the recorded music industry.
The average independent musician is already “tooled-up” for the mash up since they are not restricted to the same licensing and contractual deals that direct established artists. The danger for indies however is that they can easily be locked out of main stream media (convergence) deals between publishers, record labels, telecos, ISPs, broadcasters and the print media.
Trend 7 | 360 degree deals – the reverse side of the DIY model
Let’s face it… most emerging bands are forced to manage their careers – in effect they are “signed” to their own 360-degree deal.
The 360-degree is a deal in which the record company looks after the band’s management, publishing, live touring and merchandising as well as their record releases. The nature of this type of deal is well expressed by recent discussion on Billboard regarding Madonna’s 360 deal with Artist Nation:
“The 10-year deal encompasses all of Madonna's future music and music-related businesses, including the exploitation of the Madonna brand, new studio albums, touring, merchandising, fan clubs/Web sites, DVDs, music-related television and film projects and associated sponsorship agreements. This model will address all of Madonna's music ventures as a total entity for the first time in her career” http://www.billboard.com/news/article_display.jsp?vnu_content_id=1003658914#/news/article_display.jsp?vnu_content_id=1003658914
"When an artist focuses too much on the “stuff of marketing" and not on the “stuff of music", they can lose their way."
Clearly not all artists have the power of Madonna – but her deal is an example of the growing trend amongst recording labels broaden their reach beyond their role as CD manfacturer/marketers and use their marketing power to profit from aspects of an artist’s career they typically we excluded from.
How this affects the unsigned or DIY indie artist? Simple… expect to see more artist managers offering 360 “type” deals – where they aim also to control more revenue areas than simply afforded under the “20% of net” management deal.
Artists today have increasingly multi-faceted careers where they become distracted from doing that which truly leads to success… being awesome! When an artist focuses too much on the “stuff” or marketing and not on the “stuff” of music, they can lose their way.
1. Does the future then hold promise for 360-degree style deals that allow artist to quit marketing and start creating?
2. How will it impact what the average artist manager can legitimately offer a potential signee?
Trend 8 | R.I.P. the CD… but not the album
In our 2006 book Music Marketing PR & Image Making Ben and I wrote… “in the future, record labels will abandon their traditional role as wholesalers. They will challenge the ‘bricks and mortar’ music retailers by selling direct via their own and their artists’ websites.” (pp.26).
I don’t wish to bash the majors but consider the Sony Music (Australia) website. http://www.sonymusic.com.au. No longer does look like the label websites of old - filled with corporate rhetoric…you now have to dig for that stuff. The primary domain sends you to their digital retail site: http://www.bandit.fm.
Have the record labels moved on from CDs? In 2009 the Australian Record Industry Association noted that nearly 40 million CD albums were sold in Australia, so clearly CDs still play a role. But don’t expect the recording industry to go down with a sinking ship.
Also, there has been much discussion about the apparent demise of the album in favour of the (digital) single. There is a popular belief that iTunes and how consumers apparent “pick and choose” singles and album tracks actually discourages the purchase of full albums. Yet consider that in the USA over 2008-2009 sales of downloaded digital albums (in units) grew at 20.2% while sales of downloaded digital singles (in units) grew at only 9.2%. (RIAA 2009 Year-End Shipment Statistics)
Trend 9 | Climate change – the easy way or the hard way
All industries must deal with the inevitable drive towards a low carbon economy – yet the challenges posed by a low carbon future are yet to fully dawn on the wider music industry. Industries must respond. We can do it the easy way; proactively make carbon challenge a carbon opportunity. Or the hard way; wait until consumers move on and leave us behind. Think of the compact disc… to be sure the mp3 revolution has doomed the compact disc, but the carbon intensive nature of CD manufacturing, distribution and retailing will be its coup de grace."...the challenges posed by a low carbon future are yet to fully dawn on the wider music industry."
How can we (practically) respond? One place to begin is an informative report produced in the UK by the Greater London Authority called “Green music – taking action on climate change”. This report provides advice on how music businesses can reduce their carbon footprint. Download via http://www.juliesbicycle.com/green-music-guide
Trend 10 | Music publishers re-gain ground
The decline of the CD and the simultaneous growing interest in cover song recording, film/TV//advertising music plus non-traditional methods of distributing music such as video games, toys and the Internet has lead to an apparent power shift to publishers away from record companies.
Yet the music publishing industry has suffered as the recording companies have from the decline in the sale of physical formats. Although the recording labels have struggled the most in relation to the digital revolution – but its not all, bad. They are adjusting…
“In 2009 digital formats comprised a record 41 percent of total music shipments in the United States. This is an increase from 34 percent in 2008, and 25 percent in 2007. The total digital music market reached $3.1 billion for 2009. Digital downloads continued double digit growth in the past year reaching $2.0 billion, 19 percent growth over the 2008 total of $1.7 billion.” (RIAA 2009 Year-End Shipment Statistics)
Trend 11 | Digital mobility: walking, eating, interacting
In Disney Pixar’s movie “Wally” we are presented with a vision of the future where citizen/consumers never raise a sweat as they sit, eat and consume media. The movie certainly strikes a chord for those in western culture, where inactivity, obesity and an obsession for the Internet curiously intersect.
Enter global positioning and location-based social networking. These major proponents of this technology trend are Foursqaure, Gowalla and Google Latitude who actually depend on physical activity! Curiously again, an intersection of social networking, actual physical interaction away from the PC and mobile computing or mobile communications.
Apologies for promoting Foursquare, but this quote from their website best describes what location-based social networking is all about:
“Foursquare is a mobile application that makes cities easier to use and more interesting to explore. It is a friend-finder, a social city guide and a game that challenges users to experience new things, and rewards them for doing so. Foursquare lets users "check in" to a place when they're there, tell friends where they are and track the history of where they've been and who they've been there with. For more information on how foursquare works, see our searchable” (http://foursquare.com/about)
So in the future how might the music industry be impacted by location-based social networking? Simple. Connecting people, retail outlets, venues, music festivals to bands and their Facebook profiles.