Some thoughts on the current streaming market

I gave an interview to the Norwegian Afternoon Post last week. For those Norwegian speakers amongst you, you can find the original here.

http://www.aftenposten.no/kultur/Digitalekspert-Flere-strommeaktorerer-vil-ga-under-i-ar-7924386.html#.VPlmSCwmkPo.twitter

Aftenposten.no

In case your Norwegian is a bit rusty, here’s a rough translation:

The hard struggle between streaming players in the music industry will crack some of them during the year, says digital expert Jeremy Silver.

Updated: 04.mar. 2015 8:28 p.m.

The reason is Apple’s anticipated entry into this growing market.

When the conference part of the Nordic music industry festival Bylarm opens today, about half of the program is about streaming of the music. Not without reason, for streaming is emerging as the industry’s major source of income and amounts to as much as 75 percent of revenues in Norway now.

– There are at least 15 providers now battling for the streaming market, globally and especially in the US. In addition one has at least five players who only bet on the Asian market, in India and China. With Apple and their Beats Music on the way in, it goes without saying that this will be a fight to the death, said Jeremy Silver.

He recently released book Digital Medieval – The first twenty years of music on the web … and the next twenty, and knows all aspects of today streaming market.

– All major players going in there now, with products that are almost exactly alike, and the idea that everyone will win is unthinkable. We’re going to see a bloodbath among the many players in the course of the year, said Jeremy Silver.

Friday afternoon the English industry and digital expert comes to By: Larm in Oslo to talk about music, consumers and the many challenges of the internet.

Silver’s belief that these will be difficult times is supported by editorial director Sveinung Rindal from Norwegian services Wimp / Tidal. Tuesday saw the international version of Norwegian Wimp, which is also called Tidal, launched in Norway.

Tidal is one of the many players now vying for streaming customers globally and in the US market.

– What he describes is how the same story has continued, an ongoing bloodbath since 2010. To establish themselves in this market costs a lot, and there is so far no streaming services in profit after a year of operation. Given that Apple with its Beats manages to position itself as a real competitor to Spotify, so it can become a real bloodbath, yes, says Sveinung Rindal.

Tidal was first launched in the US and UK in October last year and aims for better sound quality (so-called lossless, like CD audio) and more editorial content than for example the Swedish big brother Spotify.

Expert Jeremy Silver agrees, Tidal is onto something right with its focus on sound quality and editorial beyond the music itself.

– The idea is ingenious, good for public relations. Now it is both Tidal and Neil Young’s “Pono” who are placing their bets there, and for me it is interesting. In a mass market the sound quality will never be important to many people, but there are some users who want it, and therefore there may be room for a player like Tidal, said Jeremy Silver.

He believes that the music industry is only just starting to exploit opportunities that exist on the Internet, hence the book title “Digital Medieval.”

– To get ahead, to the digital renaissance,  the music industry must exploit the whole culture all around. Music is about much more than a streamable or downloadable file, it’s about lyrics to songs, albums, concerts, licensing, pictures, videos, liner notes and more. Spotify and other streaming services just do not give me enough of the music context that I want. This is what we need more of, said Jeremy Silver.

He will not speculate on what Apple plans for its service Beats Music, which they bought from various folk including hiphop artist and producer Dr. Dre a year ago.

Big Data and the Music Industry

Music Week, the trade paper for the music industry published an opinion piece from me on the relationship between big data and the industry.

The piece was originally written at the request of  Jonathan Robinson at  Music Tank. I will be speaking on the topic of Big Data at their forthcoming think tank debate – Moneyballing Music:  Big Data, Consumers & A&R,  on Tues March 10th, Central London.

 Further details and booking here – http://www.musictank.co.uk/events/big-data

JS on Big Data in Music WeekHere’s the text of the article:

The music industry has always had an interest in data. Ever since the top 40 became the most popular source of music played on radio, the Charts have held a place of almost religious centrality for the industry. Getting a number one record secured the artist’s reputation and the manager’s ongoing representation, ensured record company and retail commitment, and guaranteed media exposure regardless of the actual number of units sold. For a long period, it might be argued that managers and record companies spent almost as much money trying to make sure that their songs entered high in the charts as they spent on industry-bodies tasked with maintaining the accuracy of the charts.

What is meant by big data in music? Big data often refers to the very large and highly complex data-sets thrown off by global online consumer activity, particularly arising from social media activity such as on Twitter, Facebook, Youtube or from page-views of sites such as Wikipedia. Music big data can also include more traditional measures of information about plays of music audio and video, paid-for streams or downloads of music, or even illegal music sharing activity.

Combining data sets that cover all these areas of music consumer behavior provides a more comprehensive picture than a simple sales chart. It’s possible to build big data platforms and analysis systems these days because we finally have the high levels of computing power to do so. Because of the daily volumes, gigabytes of data, thrown off by all this activity, highly sophisticated and leading edge systems are required to process such vast quantities of data. It’s only in the last five or six years that it’s become cost-effective to build systems of this power and sophistication.

It is however one thing to build platforms and systems that are capable of asking interesting questions of data of this kind. It’s quite another thing to know what kinds of questions to ask – and then to do something useful with the answers. There are only a small number of companies engaged in this kind of activity with a dedicated focus on music. There are a larger number of more general consumer brand focused businesses. The big difference is that the dedicated music companies frequently gather data proactively about all the activity that is going on out there, rather than just what their clients’ commission them to analyse. Comprehensive, proactive analysis provides a much more useful environment for research, but is much more expensive to produce.

It is also important to add that much of the research activity that goes on around these kinds of large data sets in music is based on aggregated, anonymised data. In other words, the analysis is looking at overall trends rather than individual consumer / music fan activity. Large retailers such as Tesco in the UK and Target in the US have become leaders in the researching and personalized marketing derived from analysing individual consumer activities. While, such individual targeting is every marketeer’s holy grail, issues of trust, privacy and downright creepiness add a lot of sensitivity to these kinds of research.

For the most part, big data is being used to help understand what has happened in the recent past – by gender, demographic, geography and online platform or network. It also has the potential to be used to predict the future likelihood of success but this remains a controversial and less reliable field. Analysis can identify both trajectory of individual artists or tracks, but then also see overall trends in genres or different cities or countries or among different sectors of the audience.

These are very early days for big data in music. We are walking the mere foothills of what is possible. Whether it’s in talent spotting, A&R, sales marketing, catalogue revival or brand matching, big data has a big contribution to make. In the future the combination of computer analytics and social science will undoubtedly reveal even more powerful ways of targeting music to receptive fans. I suspect that a lot more big data will flow through the digital gateways before the industry fills the skills gap, which currently prevents it from realizing the real benefits data science can bring to the industry.

Watch up, Doc?

How new digital watches will change our body language for ever — or not…

Looking at your watch during a meeting is about to change meaning as the marketing machines go into overdrive to promote the new Apple watch.

How this will change the nature of human behavior and what will become more or less socially acceptable at bars and in meetings?

When standing in a cocktail party or at a bar, checking your watch without spilling your drink is still an art some people have failed to muster, especially after they have had a few. Wearing your watch on the same side as you hold your drink is destined for problems.

My prediction for 2015 is that we are about to see a lot more spilled drinks in bars as people check unexpected text messages or emails. Hands may be freed from obsessively gripping onto mobile phones, but wrists will have to be consulted that requires a whole different range of body movements.

It is in business or professional meetings that the new behaviours will really come into their own.

The downward wrist glance maybe practiced with sufficient discretion as to involve eye movement only and no other indicator of bodily distraction. The wrist glance of course requires a revealed watch at all times.

If the watch is not revealed, then the wearer is required to make a much larger body gesture, the watch reveal — which involves pulling back a sweater or suit sleeve, possibly pushing a stiff or buttoned shirt cuff back to expose the watch to view. So the wrist glance may be discreet but the watch reveal is certainly an ostentatious move which will attract attention,

If I look at my watch during a meeting, most people interpret that as meaning I am looking to see what the time is and therefore, I am anticipating the end of the meeting. I may be expressing boredom by looking at my watch. I am certainly communicating that I am no longer responding to whoever is speaking and that my attention has strayed elsewhere. On the whole, traditionally, in western cultures, looking at your watch during meetings is regarded as a sign of rudeness. Not unlike looking for hairs on the palm of your hand, which as we all know is the first sign of madness — or at least uncontrolled OCD.

The degree of rudeness may be mitigated by the size of the meeting. If there are more than about four or five people in a meeting, such behavior is possible without contaminating the thrust of the whole. The collective attention of the meeting is likely to be more resilient to an occasional individual aberration. This indicator of disrespect may be acceptable if the person concerned is not, at that point, playing an active part in the meeting. It is certainly less obnoxious than getting busy with Candy Crush.

If a speaker acts with a kind of a detached insouciance, alternating their contribution to a meeting by frequent glances at their watch, whenever anyone else is speaking, this is generally regarded as truly obnoxious. This is a more extreme offensive than the merely obnoxious. It is an indicator that the speaker is only interested to hear what they have to say and is not listening to anyone else because he or she has no respect for them. Truly obnoxious.

If they are the chair person or facilitator of the meeting, then it is unlikely that such behavior will be acceptable at any point, unless it is directly related to the smooth-running of the meeting. But there are one or two exceptions. The skilled chair person may possibly use the body language of looking at his or her watch to indicate that the speaker has gone on for far too long and is boring the pants off everyone, or to indicate that the meeting itself is nearing a close or has over-extended into abject tedium.

If we substitute the behavior of looking at our mobile phones for looking at our watches, in contemporary meeting practice, the position has become very different. Here entire generations behave quite differently from one another. Old stuffed shirts tend to regard the consultation of a mobile phone as almost equivalent to a watch glance. Millennials, on the other hand, take a very different view. The consultation of the phone during a meeting is regarded as more acceptable because we are obviously using it to take notes, to check a message or email, to search for a relevant photo or video — or simply because when you look around the meeting, everyone else is checking theirs so you had better check yours. Indeed so massively multifunctional is a mobile phone that the regular and commonplace consultation of a phone during a meeting is rarely regarded as being unacceptable, although, of course, excessive use may be seen by the more conservative as still being plain rude.

So the question is — what happens when lots of people start wearing the kind of multi-functional watch that is already commonplace among the digirati, but which is about to get a whole lot more conspicuous as a result of Apple’s launch of their Watch and all the corresponding competitive reaction?

Arguably, people might now dare to think that, suitably armed (sorry) with their new watches, coming into meetings without a phone is now a feasible behaviour. The consequence of this will be frequent, in-meeting, watch reveals and wrist glancing. How acceptable that turns out to be or how obnoxious we consider such behaviours, may well dictate the market success of the new generation of watches.

The meaning of our body language may be about to change forever. One thing is for sure, it’s a lot less easy to share something on your watch than it is on your phone. Spending an extended time looking at watches may just turn out to be less convenient than looking at our phones — and even more anti-social.

(c) Jeremy Silver, 2015

Reading from Digital Medieval

The very fine folk at Music Tech Fest invited me to come down and kick off their event in London with a reading from my book. Here’s the video (apologies for it being slightly out of sync – all part of the art event ethic):

Is technology the new Beatles?

At a MusicTank event earlier this year, we explored the question” is Technology the new Beatles?” I curated a group of companies to present and show off different aspects of their own optimistic new uses of technology and music combined. Whether or not technology is the new Beatles, the new Rolling Stones or the new Taylor Swift come to that – the event did not ultimately choose to define – but see the video below for a nicely edited summary of the discussion.

More on a Swift-free Spotify

Stuart Dredge of Musically, is suggesting today along with a number of other music pundits that the real bone of contention is Spotify’s free tier of ad-funded music. He argues that this is the cause of Taylor Swift’s Spotify spat.

He argues that for this reason her albums have not been removed from other streaming services like Rdo, Rhapsody and Beats and WiMP.

The other issue though is that of  “windowing”. A practice pioneered in the film and TV industries. Certainly that appeals to the old command and control mentality.  But it’s also becoming less popular when piracy steps so regularly and unremittingly into the vaccuum left by windowed product.

The worldwide music industry has in the last few weeks been discussing the global introduction of day and date releases of albums globally to avoid that problem.

We are undoubtedly in a multi-speed economy. The smart money decision today for Swift was to go where the margin is best. The strategic value for the industry as a whole seems to be to release on one day on all platforms, globally.

Revenge is Swift

taylor swift

Taylor Swift, her management company and label Big Machine have exploited the nature of the current music market to the maximum with the release of  her new album, 1989.  The album is number 1 on the Billboard chart and has earned the highest number of sales of any album since 2002. When your product is blowing up as big as that,  the best business people will want to extract the greatest margin possible. In the current market that means maximising sales of downloads and physical product – at the cost of streams. This week Swift took that argument to its logical conclusion by withdrawing all her music from Spotify.

In what may be a shrewd short term move, Taylor Swift in conjunction with her label Big Machine (which is closely allied to the Universal Music Group) appear to be scapegoating Spotify for the nature of its business model and penalising those of its subscribers who are Swift fans  in the process.

The fact is that the apparently simple,  democratised model of a streaming service like Spotify mitigates against commercial successes like Swift.  The subscription model by definition pays out a reflection of total music consumption on the service during any accounting period. The more fragmented the music market is,  the more different individual artists are being played, the less each of them earns as the total pot is shared across a larger number.

This is a problem of the subscription model not a characteristic of streaming itself. In her July Op-Ed in the Wall Street Journal, Swift wrote: “Piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically, and every artist has handled this blow differently.” To lump streaming with piracy and file-sharing is an interesting conflation of legitimate and illegitimate services. I’m surprised that 25 year old Ms Swift, the definition of a millennial,  should make a mistake like that, but her writing was no doubt studied carefully before she submitted it,  so perhaps the conflation was intended.

Clearly there is a connection between legal and illegal services. Swift already has a track-record of “windowing” and holding her albums back from Spotify. Research carried out by Spotify in Netherlands,  around the release of her album Red, showed that the hold-back on the album was accompanied by  increased levels of piracy and file-sharing of that album.

For this reason, in the long term, the industry must embrace the opportunities of new technologies and find better ways to take advantage of what they bring. If subscription services are scaling in the film and TV industries,  it is the underlying business relationships  in music’s complex eco-system that need adjusting – not the technology itself – and that would include the way artists negotiate their portion of streaming service revenue in their recording contracts.  For the labels,  licensing their music as widely as possible,  to as many services as possible still seems like the best option for the majority of releases. A Taylor Swift album is not,  however, a standard kind of release. As Billboard reported this week: “Swift is the only act to earn three million-selling weeks with an album. She also racked up million-selling weeks with the debuts of Red (1.208 million) and Speak Now (1.047 million).”

What might be the longer term implications of this short term move? In her WSJ  Op-Ed Swift wrote:

“I think forming a bond with fans in the future will come in the form of constantly providing them with the element of surprise. No, I did not say “shock”; I said “surprise.” I believe couples can stay in love for decades if they just continue to surprise each other, so why can’t this love affair exist between an artist and their fans?”

Clearly, the relationship that Ms Swift nurtures with her fans is dependent on where and how those fans buy their music.  It may also be true to say that as a proportion of the whole, there are fewer Swift fans among Spotify subscribers than among purchasers of CDs or of iTunes downloads. Although a single of Swift’s  was, according to Musically, a music industry newsletter,  the most streamed track on Spotify last week, most of those streams were outside the US. Demographically this was still a cleverly judged move. Swift’s fanbase is much bigger in the US than elsewhere and Spotify has a lower market share there than in the UK or Sweden.   It highlights a key business challenge for Spotify, how to grow its subscriber base from “music aficionados” to the mainstream.  The prevailing view is that we will see all of Taylor Swift’s music back on Spotify before too long, but not before the message has been delivered. Swift may want a relationship “for decades” but she is going to make very sure that it works for her, here and now, first.

If Radiohead caused a stir with their 2007,  In Rainbows album by offering fans the chance to pay for the album what they wanted, Swift’s 1989 move may look like a mirror image, you pay for this only what she wanted. in rainbows coverNeither of these atypical interventions is likely to change significantly what the rest of the industry does. But it’s great PR. Just in case the mainstream media were not talking about her enough already because of her high level of sales, this industry intervention has certainly got even more tongues wagging. Some may feel this is a “shock”, but don’t worry it was obviously only meant as a “surprise”.

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