Top Music Business Analysts Share Trends To Watch
With 2019 now solidly in the rear view mirror, we’re checking in with some of the sharpest minds in the music biz to get an idea of where the industry is headed in the coming year.
Guest post by Emma Griffiths. This article was originally featured on Synchblog, Synchtank’s music industry blog which provides insight into music copyright, licensing and royalties. Subscribe to their weekly newsletter for the latest content.
It’s that time of year again! As 2019 comes to a close, we asked some of the brightest minds in the music industry to talk through their predictions for the trends and issues that will shape 2020.
Cherie Hu – Journalist & Author of the Water & Music Newsletter
It’s difficult to predict the future. It’s much easier to track what we’re talking about in droves today, the narratives around which will often influence our decisions and manifest into action tomorrow.
There are three general trends I’ve noticed bubble up among industry conversations in 2019, that I think will flesh themselves out in full in 2020:
We want better solutions for customer/fan relationship management (CRM). A crucial feature of the shift towards an all-you-can-eat streaming model isn’t just that subscribers don’t own their music; it’s also that artists don’t own their audiences. At worst, this can end up mirroring the world of pay-for-play social media, with particularly frustrating implications for the very community that many of these streaming services claim to serve on the backend, namely independent and emerging artists. There’s a reason why even the biggest celebrities are now sharing “their” phone numbers on social media and asking fans to text them: artists want to own the information around whom their fans are, and make that insight readily accessible in a centralized place instead of fragmented across several middlemen.
We want alternative, sustainable sources of capital for recording artists. If you ask a signed artist why they decided to go with a label deal instead of releasing music independently, they will likely mention the upfront advance as one of the most appealing factors of their arrangement. While many labels do incredible work, I don’t think there’s any reason why the vehicle of a label contract alone should still maintain such a stronghold over funding for recorded music. Some startups have recently launched ambitious experiments in equity crowdfunding, whereby fans can invest in artists’ future albums in exchange for a share of royalties (e.g. Corite and Stampede Live). The downfall of PledgeMusic, while bitter, has unearthed a new market gap in direct-to-fan funding and marketing tools that needs to be filled if we truly believe in a more democratic playing field for artists.
We don’t know who actually “owns” the music industry — yet. Is it the publishers? BMG just launched its own artist-management division, Downtown Music Holdings now owns CD Baby and Kobalt Music Group has long used AWAL to fuel the former’s foundational publishing business. Or is it the managers? After all, they oversee all aspects of their artists’ businesses, and are arguably the best positioned to diversify into multiple revenue sources and integrate vertically yet nimbly (e.g. Scooter Braun acquiring Taylor Swift’s Big Machine catalog). Or is it the tech companies? It’s no coincidence that two of the hottest players in the global music landscape right now are also Chinese tech conglomerates with literally dozens of other revenue streams (Tencent and ByteDance). This question becomes even more complicated once you realize that all kinds of music companies are now encroaching on each other’s commercial territory. Our understanding of where power is really clustered in the music industry will be continually warped and challenged in 2020.
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Mark Mulligan – Managing Director of MIDiA Research
The biggest changes are most often best seen over multiple years rather than in 12 months. Indeed, when looking at the future the old adage is that it is easy to over estimate the short term impact and underestimate the long term effect. So, on the cusp of a new decade, my predictions here are for longer term trends that will shape the coming decade:
1. The decade of creator empowerment: The 2020s will be the decade of the independent creator. The late 2000s saw the rise of the independent artist (and please, let’s stop using the term DIY, it is pejorative and demeaning). That trend will continue but the 2020 dynamics will have bigger scope. As most independent artists are also songwriters, expect to see more services meeting their needs in the way that the likes of CD Baby and Tunecore do for artists. Also, with the rise of podcasts, more artists will become audio creators in a wider sense. Finally, independence is becoming a state of mind. Traditional music companies are already having to adapt their business models to independent artists’ needs. In the 2020’s their worldviews will define the music business.
2. Distribution versus rights: The ‘Spotify versus the labels’ battle may have died down for now, but this is a truce not a peace. Ultimately, Spotify and other DSPs will progressively work their way down the value chain. By the end of the 2020s the label / distribution relationship will have been redefined. For better or for worse…
3. Tech majors will become the powerhouses: Amazon and Apple in particular will become the engine rooms of digital content, bundling content services with other products. Both are already experimenting with device bundles, but this is just the start. Music will become just one component of multi-content subscription bundles. E.g. the iPhone 12 Premium Edition could come with Music, TV+, Arcade, News+ and more for 18 months included.
4. Discovery crisis…and solution: Streaming services’ objectives are not always aligned with those of listeners. In the race to drive engagement and listening, streaming services fall into the same trap online media does: playing it safe and delivering large volumes of snackable content. This abundance overload is creating aa discovery crisis. We are hearing a lot more music, but not really discovering much. Nor are we developing meaningful relationships with enough artists. Streaming is becoming a dead end for artist-fan engagement. This crisis will get worse before it gets better. But it will get better. More tools and inputs will be used to driver personalization which will enable more risks to be taken. Biometric recommendations may happen too.
5. Catalogue valuations reimagined: The current music catalogue gold rush is based heavily on traditional views of how to value music. However, streaming has transformed how music is consumed, shifting the market from a portfolio market to a songs economy. One in which the decay rate of songs is not only redefined but also in which catalogue performance is entirely rebalanced. With so much institutional investment pouring into music catalogues, the old valuation methodologies will soon buckle. The smart money will operate with radically new ways of defining value.
6. Fandom will become the new currency: Western streaming services have done a fantastic job of monetizing consumption. But as streaming revenue growth slows, more prompts will be taken from Eastern music services such as those in Tencent’s Chinese portfolio. These monetize fandom. In China this is the most monetizable asset, in the West it will be a way of driving new, additional revenue, especially among younger audiences. Gaming companies like Fortnite have been doing this for years in the west, music services will follow suit. Facebook will hope to be the market maker for fandom in the West, but Bytedance may prove to be the bridge between East and West, between consumption and fandom.
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Dan Runcie – Journalist & Author of the Trapital, the Hip Hop Business & Strategy Newsletter
Mental health will play a bigger role in how artists approach their business in 2020.
Summer Walker and Noname’s recent challenges with live performances show that the standard live performance grind isn’t for everyone, and that’s fine. Technology advancements in VR, AR, and mixed reality can provide alternate ways to engage with fans in settings that are more controlled and more creative for both the artist and fans. More artists will also rely on their multi-hyphenate status and build businesses in new media spaces, focus on merchandise sales, and more. Artists will also continue to do occasional festival stops on their schedule without being subjected to tours that can be both mentally and physically demanding.
It may be disheartening to hear about the anxiety that our favorite artists have on their concert tours. But we should also feel encouraged that there are more options today than ever before.
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Michael Donaldson – founder of 8DSync & 8sided.blog
Over the past decade, artists and labels — using technological tools — have become increasingly independent, capturing control and ownership of publishing, masters, and avenues of distribution. But independent marketing fell into the trojan horse of social media, with many artists exclusively relying on the likes of Facebook to get the message out. The keys to discoverability were firmly in the hands of a new crop of corporate gatekeepers.
Undesirable actions by these platforms — such as algorithmically cutting access to fans and unrepentant involvement in political and privacy scandals — started opening eyes to the pitfalls of this reliance. Displeasure continues to grow as these companies fight back by further segmenting audiences and requiring even larger ‘boosts’ to reach one’s fans. The 2020 election — a looming social media shit-show — will move this dissatisfaction even more into the mainstream.
Thus, independent artists are increasingly introducing homegrown strategies that are entirely within their control. We see this in the rising talk of reclaiming fandom, direct support of artists, and the importance of individual ‘stories.’ And we see new twists on old concepts. Email lists, creative artist sites, blogs, localized grassroots outreach — tactics that predated social media, now coming together with the latest technological innovations to form a new breed of DIY.
In the aftermath, social media will remain a tool, but merely a tool — downgraded but still handy. It’s a hammer, not a house. Independent artists will understand that, along with increased interest in owning masters and administering rights, control over how artists reach and interact with their audiences is just as vital.
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Emma Griffiths is the main contributor to & curator of Synchblog, a blog created by Synchtank to provide insight into the management & monetization of music copyright. Subscribe to our weekly newsletter for the latest Synchblog posts & key industry news in your inbox every Tuesday.