Wunderman Thompson London
Wed, 31 May 2023 16:19:00 GMT
The global recorded music market is growing from strength to strength. Yet for all the benefits of technology – in particular, streaming – enjoyed by the major record companies, the industry must now look beyond algorithms and streams if it is to move forward.
According to latest figures from the IFPI, which represents the recorded music industry worldwide, the global recorded music market grew by 9% in 2022 with total trade revenues of US$26.2 billion, driven by growth in paid subscription streaming.
Subscription audio streaming revenues rose by 10.3% and there were 589 million users of paid subscription accounts at the end of 2022. And total streaming (paid subscription and advertising-supported) grew 11.5% to account for 67% of total global recorded music revenues.
There was growth in other areas, too, with physical revenues remaining resilient (4%); performance rights revenue increasing (up 8.6%) and returning to pre-pandemic levels; and synchronisation income climbing by 22.3%.
At a company level, meanwhile, the three major record companies now make $2.9 million an hour, $1.5 million of which is from streaming alone.
So far, so good. But, this is only the start. We are seeing data provide levels of incremental value that are causing a paradigm shift in the way people view music as an artform, and as a business.
So, we now need to look beyond algorithms and streams.
We need to dig deeper into music culture and examine the way society interacts with it, and how different stakeholders can play a more recognisable role in the industry and chart their own course into its future.
Wouldn't it be great if we could combine vast amounts of rich behavioural data with new sets of rightsholder data to evaluate and monetise new opportunities for the music industry, building value from the far reaches of the music ecosystem, beyond ticketing, endorsements and streaming?
By breaking new ground in this way, we could create new revenue streams of incremental value that serve not only the artist, their label and management company, but the promoter that risks everything or the venue on its knees from years of underfunding.
What if we could house brands within the music culture so that they can generate marketing value from the music industry whilst accurately transferring the right amount of value back into it?
What if we could fix the music industry by understanding fans, improving their experience and ensuring the right people are rewarded, and fairly?
New tech stacks represent a wealth of opportunities, so ensuring data is high quality and treated in the right ways is now more important than ever. Good data allows us to innovate and be creative through these new tools and data sets.
For instance, we can now consider context, which is crucially important to any music fan.
Earlier this year, Spotify launched its generative AI tool Spotify DJ.
Designed to enhance the listening experience, Spotify DJ also educates listeners about what they’re listening to and provides more meaning to the listener. This develops nuance and enhances the discovery process beyond traditional track recommendations.
Sure, it’s a tactic to ensure people spend longer on the platform. it also drives ancillary benefits outside the platform to creators and other industry stakeholders – so long as the editorial focus is relatively open. And whether we see more advertising spends baked into this remains to be seen.
If 2021 in music was about web3, 2022 was all about AI. Now, we’re looking more closely at a number of technologies that support music’s new economic value chain. Data is central to this. And taking a bipartisan approach to where it comes from and, also, recognising the synergy it creates are important.
Moving forward, focus will need to be on human behaviour – individuals or groups’ response to internal and external stimuli throughout their life, and music experiences – emotional, cognitive and sensory responses, as well as the cultural and social contexts surrounding music.
If we’re able to generate and evaluate new sets of data from music experiences and rights holders and combine these with behavioural data from consumers, we’re able to not only build new value propositions, but also track effectiveness in real time.
If we build dashboards around partnerships, we can adjust strategy and investment to respond more dynamically to external forces, making our clients’ partnership work significantly harder.
And if we develop legal frameworks that support the rightsholder in the event of a change in fortune or allow them to spot weaknesses in their performance ahead of time, again, this will spawn more innovation and product-isation.
There will be challenges, such as securing data. But already there are road-tested innovations that allow this to be done more efficiently. New tools can evaluate data without accessing it, for example, driving insights and value for partners without the need to share their data or use third-party tracking, so rights holders can explore new opportunities safely and profitably.
Such democratisation of data and the increased access to rightsholder data is a wonderful thing. It allows creative culture to thrive in a future music economy. And it supports creative ways of using the data itself to drive it.
If we learn anything in the last twenty-four months it should be that a thing is only a thing when it goes from theory to practice.
Metaverse and NFTs may have fallen short of industry hype, crypto may have taken a dive, and blockchain adoption may not be quite as fast as many hoped but that’s not a bad thing if ultimately the innovation is going to be more impactful.
Let’s hope we start seeing million-dollar sums flowing into other parts of the music industry, hour by hour.view more - Thought LeadersWunderman Thompson London, Wed, 31 May 2023 16:19:00 GMT