With Apple recently confirming a decline in download sales, it could be a good time to analyse the impact of technology on the music industry as a whole. Which business models are the most likely to succeed in the next few years? How is piracy tackled these days? Is streaming the answer to the industry problems? In other words, where is technology’s relationship with music headed?
Analysts’ attention is currently primarily focused on streaming, with good reason: as The Guardian points out, Spotify’s UK revenues rose 42% in 2013 and the music service turned a profit. In terms of business model evolutions, however, more targeted services could become the norm in the future. Spotify just launched a family plan with cheaper subscriptions for families, The Guardian reports; and Apple may be “looking to lower the price of its streaming services — be that Beats Music or a revamped offering – to below the standard $10 per month level,” according to MusicWeek.
Would lowering rates really work, as artists continue to complain streaming services don’t pay enough? Hypebot‘s answer is a resounding “no”:
The key to building streaming business models that make sense and are sustainable is to increase the subscription fees, utilise well thought-out windowing models and experiment with new pricing tiers for access-based services.
Then came the bombshell, as Taylor Swift dramatically pulled her latest album, 1989, as well as all of her back catalogue, from Spotify and Deezer; a move apparently aimed only at these two larger streaming sites. As Music Ally reported, smaller services like Rdio still feature Swift’s catalogue. At time of writing, however, the usually quick-to-tweet artist had yet to explain the move. Unwilling to get into another artists-vs-streaming debate? Time will tell…
What if the answer lay somewhere beyond streaming as we know it today? Advertising Age reports that internet radio service Pandora is now “giving musicians free access to the data it stores about their biggest fans,” for instance. And if enhanced, fan-centric and more accurate streaming services can’t save the music business, maybe other apps will: Hypebot notes that concert discovery and friend matching app Jukely just announced a $2.4 million seed round to launch an “unlimited concert subscription service”…
But what about piracy? It clearly remains an issue for indies and majors alike, who’ve long been lobbying about how easy it is to download tracks illegally from a simple Google search request. The internet giant finally published a new version of its How Google Fights Piracy report a few days ago, which “includes information on new ad formats that Google has been using for music and movie-related search queries, pointing them towards legal sources when they include terms like ‘download’, ‘free’ and ‘watch’,” Music Ally writes. Will that be enough?
Are tech players bound to reign over this fast-changing landscape? Things will undoubtedly change even faster in future months with the arrival of some big players on the market: YouTube CEO Susan Wojcicki recently said she remains “optimistic” about YouTube’s “long-awaited subscription service”, MusicWeek reports, although it remains unclear whether it could be launched before the end of the year. Others, like MIDIA founder, analyst Mark Mulligan are less optimistic (our bolds):
Just 7% consumers say they would pay for a YouTube subscription service without ads and including extra content (little surprise considering Google makes it so easy for consumers to get apps like AdBlock and YouTube rippers). But 25% say they will never pay for a subscription service because they get all the music they need for free from YouTube. The net balance is clearly negative. If we discount both rates and apply them to the US and UK population, Music Key would contribute about $400 million dollars in revenue in one year but would be responsible for more than $2.6 billion in lost subscription revenue, meaning its net impact would be around -$2.3 billion.
Meanwhile, hardware-wise, music consumption is already helping drive technology sales – at least in the UK, where “each 1% increase in demand for music translates to a 1.4% boost in sales of smartphones and 2.2% for tablets,” The Guardian writes.
As a matter of fact, music and tech have become so closely connected that the former is becoming “an effective millennial marketing tool,” according to Mashable: digital marketers increasingly use it to connect with millennials “on an emotional level that aligns with their complex value sets surrounding socioeconomic conditions and new cultural norms.”
This is where technology turns into something different: not just a means to sell music, but a tool that get consumers closer to the content they love – allowing them to invest in bands for instance, as The Huffington Post explains. Not to mention crowdfunding platforms such as Indiegogo, which “democratises access to capital,” according to Inc. (and whose co-founder Danae Ringelmann will speak at Midem next year!)
So if technology alone can’t save the music business, maybe tech-empowered fans will?
Image: Brian De Palma’s 1974 cult film Phantom of the Paradise, starring William Finley (right) and legendary composer Paul Williams (left, who will speak at Midem next June!) Photo © CBS / Fox
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