Guest post by Bobby Owsinski of Music 3.0
2017 is now in the books and it was a big year for the recorded music industry, so now it’s time to look ahead to 2018. Here are 7 predictions that can affect the music business in ways big and small in the upcoming year should they come to pass.
1. Spotify finally goes public, and the going gets tougher. The time comes for Spotify to finally make the transition that’s been promised to investors for so long. The company gets listed in 2018, but that just opens it up to new challenges. Questions about expensive office space, scrutiny of its metrics, and pressure from the major labels to drop its free tier increase. Growing competition (see #2 and #3), and usage caps (see #5) make growth more difficult than in previous years, which affect its stock price by the end of the year.
2. Amazon grows the music streaming pie. Amazon gives its stand-alone Amazon Music Unlimited service a marketing boost, and because of exclusive deals thanks to #5 below, becomes a major player in streaming distribution. The company uses its platform prowess to increase sales of physical product and merch, and becomes an increasingly lucrative sponsor/partner for superstar artists.
3. Google gets its music streaming act together. Google consolidates its confusing music offerings (Google Play Music and YouTube Red) into a single service. While less challenging to market and easier for the consumer to navigate, the new service still struggles to gain traction against the market leaders at first, but manages to show growth by the end of the year thanks to #5. The launch of the new service stifles major label protests about the low royalty payout from YouTube throughout the year.
4. Streaming networks up their game. In an effort to further to differentiate itself from the competition, Apple Music finally becomes an all high-resolution audio service with no increase in monthly price. Thanks to collecting hi-res masters for the last 5 years, its miles ahead of the other platforms, which have to scramble to keep up. Some users can’t hear the difference, but many can and feel its worth jumping through the hoops imposed to by #5 to maintain a subscription with the service.
5. The lack of net neutrality changes our online media consumption. It happens gradually at first, but by mid-year telecoms and ISPs begin to exert the new power bestowed on them by the recent changes to the Net Neutrality ruling. First usage caps are put in place so that users must now pay an extra fee for higher consumption. Then they each do exclusive deals with a streaming network, making it more difficult and more expensive for the user to choose their streaming network of choice. This puts great pressure on stand-alone platforms like Spotify, Tidal and Pandora, but is just a passing cost to deep pocketed Google, Apple and Amazon. As a result, the streaming music industry consolidates even further.
6. Major labels lose the middle class artist. Lower income from catalog and physical product results in fewer and lower advances to artists. Artists and their managers realize that its better business not with sign to a major unless they’re on the cusp of superstardom, and opt to maintain a DIY approach with indie label support instead. The majors finally become aware that their marketing infrastructure is based on television, radio and print, media all in decline and ignored by their target demographic, and begin to place more resources online than ever before.
7. Vinyl record sales plateau. Vinyl remains a viable niche business but its growth slows to single digits. Many young vinyl buyers get frustrated with the relatively slow process of actually playing a record, and many use marginal playback systems that don’t provide a sufficient audible difference over streaming, especially since many services are transitioning to hi-res audio. Most return to online platforms for quick and easy consumption.