At the beginning of every year, as the music industry gets over its winter hangover by inducing another one at the Midem conference, the pieces of the puzzle that used to be called the industry fall into place again. The process of getting together and discussing the state of the nation is ever more needed when everyone is embarked on rebuilding the architecture of an entire industry. Taking stock and gaining a fuller perspective are more and more valuable when the ground is constantly shifting beneath our feet.
A few of course are also tasked with the additional burden of trying to maintain their living from the dwindling pieces of the old industry. The majors have a really difficult task in doing that and, as they struggle to manage their transition from one model to another, they do everything they can to try to slow the whole process down and prevent other players coming in and stealing the ground from under their feet. It’s a sad fact that after ten years of creeping transition and increasing economic pain, the process hasn’t changed that much. The majors are still making it difficult for others to do business with them and try to extract as much cash from technologists and venture capitalists as they can, whilst paying out to their contracted artists as little as possible.
But there are a lot of reasons to be optimistic about the new digital media business that is starting to grow up between the cracking paving stones of the old analogue one. The number of startups and vigorous new companies trying out new models is larger than ever. Despite the recession raging around us, many of these companies have got sufficient funding to struggle their way through the next twelve months and come out the stronger on the other side. For those that don’t, there are still plenty of people looking closely at this industry, searching for bargains and seeing the potential becoming clearer daily.
So what does the new landscape look like and where are the gaps?
Increasingly, it really does look as if the distribution piece of the puzzle is sorted out pretty well. There are the major retailers of the catalogue for download or stream or subscription (iTunes, Amazon, Rhapsody, 7Digital, Nokia, all playing in the game – as well as the advertising funded crew We7, Spiral Frog is apparently still going and maybe even QTrax ). There are the new digital platform providers who are trying to offer artists clean and simple means of going direct to consumers (Myspace, Topspin, Mubito, Musicglue, Audiolife, bandcamp, etc). And there are the consumer focussed folk who are either trying to aggregate content to make the fan’s life easier (Facebook, iLike, Shazam, etc) or provide discovery and recommendation services – either by human intervention (the playlist) (Mystrands) or by algorythmic cluster analysis (Imeem, Muxtape, Songkick for gigs, etc). There are the radio/tv type services that really just happily stream stuff at us and try to make that a bit more of an interactive service (Pandora – US only, Last FM, Spotify, and of course YouTube, Hulu – US only, Muzu, for video, etc).
Now we’re just starting to see a few companies focussed on the data that’s thrown off by all of this work (Hitwise, Bandmetrics, etc). I’ve talked before about data because I see it as the component with the greatest potential in all of this. If there’s one thing the web throws off it’s tons of data. In this area one big question is whether the killer app is an aggregator service that scrapes and mines and spiders and tries to track everything that moves – and then license that back to everyone. That’s the Nielsen model. Or is it customised, commissionable tracking service you can hire for your artists and their competitors? Or is it a built in set of metrics that some of these platforms start to offer to help provide and sharpen the feedback loop of marketing and consumption?
So I think there are two key gaps – one is really good web marketing and promotional tools. Where are the companies that are creating simple tools for artists to create viral word of mouth affects across Myspace or Facebook or stickiness for official artists’ websites? A new data-driven one might be Buzzgain – but it’s early days to tell what they’re doing and they look like quite an expensive service upfront. Seems like the digital platform providers need to develop more tools like this and incorporate them in their offerings to artists – and I’m not convinced that they’re doing that too well yet.
The other gap is for the fully comprehensive business that brings together the artist services side with the consumer offering and makes use of all the data that it is gathered from both sides of the equation to sharpen up their effectiveness in bringing fan and artist together. The bigger players like MySpace Music ought to be well positioned to do this, but somehow they’re not there yet. Newcomers like Topspin or Imeem could be consolidated together to create that opportunity and then build out the switch in the middle to make it really effective.
So expect to see this coming during the next few months – and somewhere to confuse us all on top of this is the increasing need to find ways of using the cash flow of brands to stimulate the content flow of bands. That’s what we used to call an advertising revenue model but which today can’t be called that – because we know that’s going away. So here is the really interesting key to all of this. The biggest advertising driver on the web is Google and their biggest revenue mechanism is serving TEXT classifieds in our faces. Wow! With all the creative, design and styling skills that have made advertising so interesting over the last few years – in the beginning of the 21st centry – it’s back to TEXT and all the intelligence is in the back-end contextualisation analytics. Truly we are still in the foothills. There really is some very cool stuff yet to come!