The Future of Music

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Deck prepared for lecture on "The Future of Music" with Paddy Spinks and Rupert Perry for Seth Shapiro's USC course on "The Future of Entertainment" with special thanks to UK Wired

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The Future of Music

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  23. 23. http://www.tastefullyoffensive.com/2012/11/why-mtv-doesnt-play-music-videos-anymore.html
  24. 24. • Revenue from recorded music in the U.S.amounted to $7 Billion in 2011, less than halffor the industry at its peak in 1999 (RIAA)• Apple said this week that its iTunes store hadsold its 25 billionth song
  25. 25. • All this points to the leveling effect of digitaltechnology, social media, and everything else thatblew up the old industry• In 2012, the compact disc continued its longdecline, with sales down 13% from last year, anddown 70% from 10 years before (SoundScan)• iTunes offers 28m songs, Spotify 20m, MOG 16mvs. Amoeba 250k records• HD audio coming
  26. 26. THE INTERNET HAS PERMANENTLY CHANGEDUSER BEHAVIOR AND CONSUMEREXPECTATIONS:• PERSONALIZATION• INTERACTIVITY• IMMEDIACY• COMMUNITY• FREE
  27. 27. • Nearly 2/3 of Teens use YouTube as theirprimary music source according to Nielsen• With 1 Billion views daily, it’s now the biggestglobal audio/visual platform• Universal Music Group #1 Ranked MostViewed Last 30 Days with 573,037,596 views• Vevo #1 Network with 1.8B(tied with Machinima)
  28. 28. AT FIRST, NOT PEGGED TO BIZ MODEL:• NO CHARGE, FINANCIAL REWARD FOR CONTENT CREATION• LACK OF BARRIERS TO PARTICIPATION• DOMINANT RECORD DISTRIBUTION MADE IT HARD FORPEOPLE IN INDUSTRY TO THINK AUDIENCES WANTED TOCONSUME CONTENT IN A DIFFERENT WAY• A PLATFORM DOES NOT MAKE ANY ASSUMPTIONS ABOUTHOW PEOPLE ARE GOING TO USE IT• YIELDED DISCOVERY OF NEW PATTERNS OF ATTENTIONAMONG AUDIENCE BEHAVIOR RATHER THAN BUSINESSPOLICY
  29. 29. ABILITY TO INTERACT WITH AUDIENCES KEY TO YT’SSUCCESS:• INITIAL MODEL TO BUILD AUDIENCES AROUNDNICHES WHETHER DUBSTEP OR MAKEUP• THE AUDIENCE TURNS INTO USERS• USERS TURNED INTO CREATORS• THOUSANDS OF CHANNELS NOW ABLE TO FINDTHEIR AUDIENCE AND BUILD CONTENTSPECIFICALLY FOR THAT AUDIENCE
  30. 30. • JAMAL EDWARDS SB.TV HAD 144M CHANNELVIEWS WITH £200K IN REVENUES 2012• ALEX DAY 500K PAID DOWNLOADS• LUKE HOOD UKF BASS CULTURE250K ALBUMS SOLD
  31. 31. • WHO NEEDS A LABEL NOW?• FREEMIUM MODEL WITH VOLUNTARYTRANSACTIONS• “PATRONET”• http://www.techdirt.com/articles/20090201/1408273588.shtml
  32. 32. • As an alternative to downloads, streamingmusic is gaining, served up in various styles byservices like Pandora and Spotify• Even Myspace is back, having recentlyrelaunched with a clean interface and amandate to siphon music fans loyalty from FB
  33. 33. • Share of total US radio listening now stands at 8.03%, anincrease of 5.55% with 1.39 billion listener hours• Platform’s monthly music metrics for Jan 2013 showlistening hours increased 47% - up from 952 million duringthe same period last year (Hypebot)• 65.6 million active listeners at the end of January, anincrease of 38% from 47.6 million (YoY)• Current strategic focus is to grow car listeners (only 1million now)
  34. 34. • Sweden, home of Spotify, saw overall recorded music income rise fromjust over SEK 829 million (£79.82m) in 2011 sales to over SEK 943 million(£90.8m) in 2012• Overall 2012 Swedish music sales increased 14% with 90% of all digitalincome coming from streaming services• Digital sales increased to 63% of total music sales, up by 12% compared tolast year• 90% of these digital sales come from streamed music services (82% in2011) while 10% are from other internet services (18% in 2011)• Album sales account for 35% total music sales• Sales of physical albums decreased by 15% in 2012• Of the total music sales, 40 percent are Swedish performers and 60percent are international performers• Vinyl sales increased by 59% in 2012, but still represent just 1.4% of totalmusic sales
  35. 35. There is no music business model in the future?Then what?• Artists will expand selling direct to fans• Pledgemusic.com Kickstarter model for music• Brands will sponsor artists for distribution andproduct placement
  36. 36. Now, the only money left for labels is live musicis the business:• Will Live Nation is the WalMart of thebusiness?• More than ½ of 2012’s top 10 highest-grossingconcert acts qualify for AARP membership• Can touring industry find new sources ofrevenue and survive Baby Boomer Bust?
  37. 37. • APPLE starts streaming iTunes• Alternative radio becomes mainstream• The per user model has replaced the per unit• The only future proof asset:The fan relationship
  38. 38. • SUBSCRIPTION• MUSIC SEARCH ENGINES• APPS (DISCOVERY, SHARING)• SOCIAL RECOMMENDATION• SELF DISTRIBUTION• PIRACY• GENERATIONAL SHIFT IN CONSUMERBEHAVIOR & EXPECTATIONS

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