If there was a single key theme at Midem Digital Edition 2021, it was that the days of a single key monetisation model for music are long gone.
Streaming has undoubtedly been the driver for the recorded music industry’s return to growth in the last five years, but the next phase for this business is going to be about unlocking many new revenue sources beyond those streams. Often with artists in the driving seat.
Streaming is still a very important baseline for the industry, not least because it is attracting ever more investment into music rights and music technology.
“We’ve seen the market grow very significantly, and we know this is a trend that is going to last at least for another 10, 15 years, especially in the emerging markets, where we’re still at the very early stages of recorded music adoption,” said Denis Ladegaillerie, CEO of distributor Believe, in his Midem Digital Edition keynote. “I think investors now realise that there’s that underlying structural trend.”
Streaming has far from hit its ceiling, even in the biggest and most mature markets, but as Ladegaillerie pointed out, the newer markets are where the industry is optimistic for rapid growth in the coming years.
“We’re seeing the fastest growing markets in 2021 are Turkey, Poland, Japan, Mexico, the UK and the Philippines,” said Merlin CEO Jeremy Sirota in his own keynote at the event.
“This represents every continent except Africa, yet when we look at Africa, we’re seeing tremendous engagement. We’re seeing growth in platforms, and we’re seeing increased efforts to create these customised user experiences, tailored for fans, that are country specific and genre specific.”
New opportunities are the Covid-19 pandemic’s silver lining
Streaming’s growth has not been hurt by the Covid-19 pandemic, but the experience of the last 18 months has also accelerated a number of other digital behaviours well beyond music. Gaming, online shopping, video conferencing and more. Within the music industry, too, it has wrought changes that are unlocking new ways to reach audiences and make money.
“Just because we’re going to come out of that at some point soon, and we’re coming out of it now, doesn’t mean we’re going to go back to where we were,” said SoundCloud president Eliah Seton at Midem Digital Edition.
“I think that is how 2022 will be defined: we’re all going to be going to shows again, we’re going to lose as many Zooms as we’ve had, but we’re not going right back to where we were. And all of these new advancements, because it has brought fans and artists closer together, among other changes, those are here to stay. We’re now way down a path that may have taken years longer to get down but for the last year and a half.”
Sirota had a similar view, and illustrated it with a description of the changing workflow for independent labels in 2021, as they adapt to the new environment.
“Instead of only planning a release cycle, you now need to focus on unlocking YouTube Shorts. As you look at vinyl manufacturing lead times, you’re creating Snap lenses. As you plan the next promo tour, you’re pitching your music to influencers on TikTok,” he said.
“We are in the midst of an evolution of what it means to build social connections between fans, artists, and their music.”
Niche communities go deeper for artists and fans
It is these deeper social connections and communities that are providing one fertile path for the industry to explore, according to Oana Ruxandra, chief digital officer and EVP, business development at Warner Music Group.
“Today the traditional streaming platforms enable global scale. Massive scale of eyeballs. So if you get on a playlist or you get on the right chart or the right radio algorithm, you can be and reach all of these people in all of these different places and really have massive success. But there is also a space for niche communities and micro communities,” she said at Midem Digital Edition.
“Communities of fans, and that’s really what I think technology is enabling… It’s being able to speak directly to a smaller fanbase that is a lot more engaged, a lot more interested in creating value, training, engagement and opportunity, and obviously a lot of those can be monetised.”
Ruxandra was part of the session involving SoundCloud’s Seton and his colleague, chief content and marketing officer Lauren Wirtzer-Seawood. She also talked about the potential of these communities.
“We want to open this experience up to ensure that all of your core fans and future fans have the opportunity to directly support you, to directly communicate with you, and for you as an artist to have the opportunity to then communicate with the fans, so that you can continue those commercial opportunities outside of the album or single cycle.” she said.
Seton contrasted these opportunities with the much-discussed economic model of streaming, and how that works for the majority of artists.
“It’s something like 50,000 tracks a day or 60,000 tracks a day getting distributed to DSPs. That’s a massive number. A tremendous amount of noise. Even with the tidal wave of streaming, there just aren’t enough streams for that to make it possible for all the creators to live off of that work,” he said.
“The opportunity there is to create non-streaming sources of income in those interactions, and create products, tools and services that are above and beyond, or separate from the stream. If you wanted to spend a hundred dollars right now on your favourite artist, it actually is kind of hard to do that. And I think in a matter of time, that’s gonna change dramatically.”
Live concerts return after lockdown, but livestreaming isn’t going away
Another new monetisation model up for discussion at Midem Digital Edition was livestreaming, where a panel discussion of where it goes next predicted that it will carve out a role alongside physical concerts as they return, rather than being seen as a pandemic-only trend.
“Livestreaming now fits into the anthology of everything else that we do as artists and as creators and people that represent artists. And I think that’s a good thing,” said Ric Salmon, CEO of promoter Driift, during a panel on livestreaming.
“We’re just finding that it’s part of the general lexicon of what people are talking about. ‘Yeah, of course we’re going to do a livestream, and we’re going to do it at that point when we release the album in June next year or in October next year.”
This is aided by the interest of the biggest streaming and social services, with YouTube, Spotify, Apple Music, Instagram, TikTok and others all keen to do more with artists around livestream events.
TikTok’s global head of music Ole Obermann explained that while most music livestreams on that service have been free so far, it has been experimenting with paid events too.
“We’ve done in Asia a few of these programs, and very big numbers. Half a million plus in the case of one that we did in Korea a few months ago,” he said.
“Really really big numbers. So we’re pretty excited about what we can do there. We don’t even want it to be just the superstar artists who are gonna draw half a million or a million or even millions of audience. We love the idea also of working with emerging artists, and perhaps those are paid events, perhaps those are unpaid events just to get the spark going, but we want to work with artists across all the different levels of their careers.”
There was a sense of livestreaming as working in partnership with other monetisation models, from music releases to the newest, buzziest income streams.
“We have encountered several cases where the livestream is really a complement to a moment-in-time offering,” said Michelle Munson, CEO of tech firm Eluvio, during the same panel as Salmon.
“We have been involved in three different opportunities that, all shows that have used the streaming experience as the sort of compatible partner along with some type of NFT offer or drop, and that’s also being combined with tours and new releases.”
Understanding NFTs’ true potential: community and utility
NFTs have seen plenty of hype and also a backlash so far this year. At Midem Digital Edition there were some clear-eyed verdicts on what this technology really means for musicians and music companies however. One of those being that this tech is here for the long term.
“It’s a technology of trade. It’s an advancement of how we will trade, with the way we use cash. It’s similar to that, and it will be the next credit card,” suggested artist Steve Aoki in his appearance at the event.
“We already live in a semi-digital semi-physical world. This is just an advancement of how we will be bartering, buying, selling and trading… Soon we will all be buying, selling and trading NFTs to exist. It’ll just be part of natural life.”
Aoki and several other speakers emphasised that music NFTs are not a get-rich-quick scheme however, despite the many headlines in early 2021 about multi-million dollar sales for some of the early examples.
“The most important thing is that each advancement and each innovation that different artists and creators are bringing to the culture are bringing more value or what’s important to the people that are buying,” said Aoki.
“People that are part of the community. I think that’s one of the most important things for people that are new to this is that this is about the people that are part of what you’re doing. If you’re not providing value to your community, in a way that they see that there’s a value, then there’s so many others that they can join.”
He was backed up by Joel ‘deadmau5’ Zimmermann, speaking in a session dedicated to NFTs and their potential for music.
“Right now it’s just this mad scramble, with the spotlight kind of on, you know, selling a JPEG for a million dollars or whatever. I’m really paying attention to what that underlying technology can do for future shows, tangible goods and services and stuff like that,” he said.
Shara Senderoff, partner and president at investment firm Raised In Space, agreed with this vision of usefulness being the way NFTs will unlock value for artists and fans alike.
“The future of it is that they hold utility. They either become an access key to unlock a world. They become a ticket that could get you into a show. They become exchangeable for something else. Maybe not all of them, but the nature of where we’re headed is that there has to be utility,” she said.
“You can’t just purchase something and it sits in your wallet and you hope that it becomes worth more money. We’ve never seen anything truly happen like that. So I think this is going to a place where you can utilise them.”
Making the most of the emerging creator economy
Another strong theme of Midem Digital Edition 2021 was the creator economy, and specifically how our industry gets to grips with a world where there are many, many millions of music creators, who can’t possibly all be supported by streaming, but who could individually find revenue streams outside that which work for them.
“The creator markets in the traditional world was a very small market. Very few artists around the world, and in most of the countries who actually captured 80% of the value of the market,” said Believe’s Ladegaillerie.
“Now we live in a world where the creator economy is an economy where at very early stages, all of our creators have market access… Some of them are going to remain a hobbyist musician, but some of them are going to become the future superstars of tomorrow.”
In a session focusing on ‘Elevating the Creator Economy’, Midia Research MD Mark Mulligan noted that while there are around five million musicians currently self-releasing their music to digital services, there are “around half a billion” people currently either playing an instrument or planning to learn one, and 55 million who are producing and recording music in some form.
“We essentially have the collision of two irresistible forces. The irresistible force of this vast growth in the number of music creators, and the irresistible force of a finite pot of [streaming]revenue to be shared among creators,” said Mulligan. But his colleague, research consultant Kriss Thakrar, noted that this is where other revenue streams come in.
“They’re finding all these new, other avenues of monetisation through things like Twitch, through things like beat platforms, things where they can monetise their process and engage with communities to participate in a creator economy and get a lot more fulfilment out of their efforts as creators,” he said.
Mulligan continued that theme. “These small creators, what they want is to be respected in their scenes, and be successful where they can be successful. That doesn’t necessarily mean being successful in streaming any more,” he said.
“Doesn’t mean they won’t still want to get the music onto streaming services, it just might be the places they find success might be on TikTok, it might be on Beatstars, it might be in BandLab, it could be a whole host of other different places. They’re essentially monetising their niches.”
Sync opportunities, diversity and the climate emergency
Midem Digital Edition 2021 also hosted debate about other opportunities and key challenges for the music industry as it enters 2022. The booming market in online video being one of the former category.
Netflix‘s director, music creative production, series Alexandra Patsavas offered plenty of encouragement to music companies and artists hoping to see their tracks featured in popular shows, but warned that they must make sure to get the basics of pitching right.
“It’s about focusing your pitch. Are you interested in a certain programme because you love that showrunner or the content that you’ve heard about? Think about where you’re sending it, and then make sure that if you are sending it, that you understand who owns the master and the publishing,” she said. “It’s important to have those rights in place so that if the supervisor has to move quickly and secure those rights, they can do that.”
Improving diversity, equity and inclusion in the music industry is one of the biggest challenges, but also the biggest opportunities if the music business can get it right. Midem’s Breaking Barriers: How Services are Facilitating a More Equitable Music Industry session offered a positive view of the progress made so far, and a clear-eyed vision of the change that still needs to come.
“What I’m really motivated by is how our companies and our industry can commit to a real improvement in the balance,” said Molly Neuman, president of Songtrust.
“When we team up, it sends a statement. And I think for me, that statement is that were telling the industry and the world that we support the advancement of women, women of colour and women from marginalised communities, and that we are coming together to create unique opportunities specifically for these groups,” added Faryal Khan-Thompson, VP international at TuneCore.
“I think we are seeing a positive change. I think we are seeing a positive difference… How do we lift up? Because the more we can lift up the other women and have more women at the table making the decisions, we can create a better, fair playing field for music artists, songwriters, producers,” said Addy Awofisayo, head of music, sub-Saharan Africa at YouTube.
Meanwhile, on the challenges front, Midem Digital Edition’s Acting for Climate – One Record at a Time panel outlined why the music industry can and must do more to help tackle the climate emergency, including encouraging fans and governments alike by example.
“To put it in some context, let’s not forget that more than half of all carbon and greenhouse emissions ever released have been released since Kylie Minogue released The Locomotion just over 30 years ago!” said Maddy Read Clarke, co-founder and campaign director at Music Declares Emergency.
“We need radical action from governments and corporations, and how do we in the music industry contribute to making that a reality? How do we ensure there’s sufficient political will to ramp up action?” said Peter Quicke, co-CEO of independent label Ninja Tune.
“And really, we can do that by reducing our own emissions, and using our voice where we can, using the voice of artists where we can, to reassure politicians and the world generally that we’re taking this seriously, and that us as part of the electorate, as part of the business community, think that radical action is required.”
Wrapping it all together: a music industry embracing change
Bringing this all together, there was a sense at Midem Digital Edition 2021 of a music industry whose community of creators is exploding in size; where new business models are suddenly springing up to suit large music companies and individual, independent musicians alike; and – importantly – where these new models can be creatively rewarding rather than simply a pipeline of dollars.
This was seen when Matt Heafy, of metal band Trivium, explained in a joint session with Twitch why he sees that video platform as more than just an income stream.
“Twitch has actually made me better at what I do for a living,” he said. “When I’m streaming out here, what I’m doing 75 to 90 per cent of the time is rehearsing my band’s music to our followers. And in doing that, when you’re rehearsing correctly and practising correctly, inevitably you should be getting better at what you do.”
“So I’ve noticed that I’ve become a better singer, screamer, rhythm guitar player, lead guitar player. I’ve become better at public speaking, better at entertaining, better at jokes! All sorts of things. It’s been truly amazing. That’s all thanks to being able to be connected non-stop to the people directly who support our band.”
Heafy has adapted to a new platform, just as the music industry is learning to become ever more flexible in response to the various new monetisation opportunities. This was something that both Merlin’s Sirota and WMG’s Ruxandra emphasised.
Ruxandra noted that fans are driving many of these opportunities through the platforms where they gather and the new digital behaviours that have been accelerated by the pandemic.
“It’s not creating experiences you think the fans want, and them building on top of that. It is: consumers are deciding things, and they are deciding what they want to do and deciding what they want to listen to, and we need to build and enable those experiences,” she said.
“There’s no stopping consumers from engaging with technology, so you’ve really gotta enhance, you’ve really got to dig in.”
Sirota riffed on the theory of an ever-evolving landscape of music, technology and creators. “Let’s take a long view of the music industry, where we know there’s one constant: change. Constant change and more change,” he said.
“Change that has disrupted business models. Change that has disrupted revenue streams. Change that has disrupted the means by which music is created, released and marketed.”
“Change requires continually reinventing your approach to the market. The new leaders who will succeed are going to be those who embrace an important truism: change is endemic to music.”
Get more insights from Midem Digital Edition 2021 with sessions available on-demand on our dedicated Youtube Playlist. Enjoy!