In this guest post, Keith Jopling, consultant and former director of strategic analysis and research for the IFPI, shares his views on “what it will take for the industry to achieve real breakthrough in 2010.”

2009 has been a big year in music industry developments. I don’t want to re-cap here
what you already know, but 2009 was the year in which iTunes finally found itself with a formidable challenger brand that wasn’t P2P. As Spotify goes from strength-to-strength, I hope that 2010 sees that service face down the cynicism about its commercial prospects and demonstrate to all that by giving consumers what they want, success will follow, and bring a win-win for both consumers and the industry.

I also applaud governments actively taking a stand. Though in the UK the Mandelson-led
policy is somewhat muddled has a fair way to go to be helpful, it is at least, and at last, a policy. Services wise I also really like the look of MOG’s all-access service and the newly beta-launched M-flo. Both, like Spotify before them, seem to be offering something different and making their positioning clear. I’ve yet to see any puns about how many lives MOG can have following that other feline industry survivor Napster.

I wonder if the second-generation subscription brands will survive another year though. I
also have less hope for ISP-based solutions, from what we’ve seen so far. Like Nokia’s Comes With Music, I see signs of too much compromise and not enough clarity and strength in the propositions to add value to music fans – yet.

The same goes for Myspace music. Myspace was initially built around a clear value
proposition – the ability to network around artists and sample a limited palate of their songs. That proposition was so good it became the discovery platform for a short while but has been surpassed. It needs similarly simple and focused innovation to re-invent its position from now on.

I’m looking forward to what HMV will do with 7 Digital. Though not yet strongly innovative,
7 Digital has survived the space where others have failed with solid business acumen and a grounded view of its own success. With HMV now behind it and a number of key B2B partnerships in place including Blackberry, I expect greater things. Finally, Apple is not to be written off of course, especially with its recent acquisition of LaLa. iTunes is overdue a revamp rather than just refreshments and when it comes, it should be good.

Rather than evaluate the strengths, weaknesses and the prospects for these services and
others, I’ll distil my view of what it will take for the industry to achieve real breakthrough in 2010. The industry needs to face five simple ‘truths’ about the market and where it needs to be to bring a new injection of pace:

1.       The industry isn’t close enough to its customers to achieve real breakthroughs, yet. I’ve written more extensively on this elsewhere. We’re still to see a service based on real market insight in the way that iTunes was back in 2004. We will
not really know what music fans want by piling up ever more technical features and radical pricing models. We need to start building targeted services based on real customer needs. Spotify is the test-case. Its proposition has been powerful in attracting users, but those users will get fatigued eventually. Subscriptions have always struggled with retention – mainly because music isn’t designed to be consumed in millions of tracks. The good thing is, Spotify knows this. It needs industry support now in building on its remarkable momentum.

2.       The pirates always knew the game would be up at some stage – the industry needs to let them know unequivocally that 2010 is the year the party ends. The overwhelming driver of file-sharing was opportunism. A why-not attitude has prevailed among the majority of P2P users, with various post-hoc rationalisations along the way
– mostly excuses and they know it. The industry needs to know this – the pirates expect it all to end, so let’s end it now. This means stepping up the game on everything – anti-piracy, new services, industry PR – the works. Sure, piracy will carry on for a bit, but make 2010 the turning point. Move on with the thinking. The only quid-pro quo is not to expect a boost in legal sales as a direct result. One legacy of piracy is bloated music consumption way beyond natural levels.

3.       New music products that aren’t actually music, are bunk. A few years back Allan Leighton ask me to distil in one sentence what the music industry needed most. I said “a new product”. It sounded right at the time, but my thinking has moved
on. Hare-brained schemes to ‘window’ releases, put web-cams in the studio and have artists Twitter forever and ever amen, will lead to no new money whatsoever. The real ‘engagement tool’ in the music industry is the music. The route to success is linking consumers with the music they will love most. Time and again in surveys, lapsed music buyers blame not piracy or lack of quality music, but lack of time and knowledge – that’s why the 35 year-old fan is still hooked on Oasis or U2 – when they could be enjoying a whole new world of music.

4.       The big labels have a clear strategy to survival but they must execute on it sooner rather than later. The Majors know that despite what David Munns has called “less pain for longer” – a series of continued successes including some hits, some big license advances etc. – the current model won’t sustain. Survival is a
mix of diversification into other sectors, more rational business operations and improved marketing – the latter through more productive partnerships with digital providers. All these are in place but the age of experimentation needs to give way to more decisive strategies now, requiring the industry’s leaders to make some real trade-off decisions, not to flunk them.

5.      Artist-to-fan models are bunk. No new artist can sustain a career from boring 10,000 people to death with monthly singles, rough-cut demos, blog-posts and e-mails – it’ll last six months before the fans move on to a more interesting artist with real songs. Even cult artists who have succeeded with this so far will run out of steam, or ideas, or both. The technologists who expound this stuff are not thinking straight. Music fans are fickle and have all the choice in the world. That’s why the industry cycle has worked so well in the past. It needs to speed up with the times of course, but artists need to make music, play it for a while, then go away for a while and have a good
rethink. The only change is, when you decide to come back, just don’t call it a comeback – make sure you’ve really changed. Radiohead is the model – you need to constantly move on and shift shape no matter what.

It seems to me the next decade is looking better than the last, but it might be even better
if the industry can face my five truths and get on with the job! Season’s best!

For more music industry insight see the blog http://juggernautbrew.blogspot.com/.


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