The Owners of the Music Industry

To further my discussion of my previous article on the revenue artist make within streaming, I wanted to look at the whole picture. Where is most of the revenue going if in 2014 global recorded music totaled in the US at $6.9 billion?  To break down the consumption of music in the US by genre, although possibly in broad terms, according to a study released by Nielson Music, rock music was twice as popular in 2014 as pop musicaccounting for 29% of the industry’s music consumption across album, track purchases, and music streaming.

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Forbes magazine also provides us with the top three paid musicians of 2014:

With Dr. Dre’s (Aftermath Entertainment) most recent sale of Beats, the company he cofounded, to Apple for $3 billion, he is listed at number one going home with $620 million this year before taxes. Coming in far second is Beyoncé (Columbia & Sony Music) with $115 million as her most successful year yet.  And finally, The Eagles (Asylum) with their longevity in the industry at $100 million.

The Wall Street Journal is reporting that after securing $400 million in fresh funding, Spotify is now worth more than the entire US recorded music industry at $8.4 billion.

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Sony leads the record label trio at $4.9 billion but if we look at Live Nation it will not be long when it takes a step ahead of all three. With Live Nation’s monopoly in live music, being that most revenue is from cold hard ticket sales, it would not be surprising that Live Nation takes the lead within a year.

The Music & Technology Relationship? It’s Complicated.

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There is no doubt that music and technology have continued to evolve both separately and together throughout the years. Technology has the power to seriously complement or hinder music. On the other hand, music has the power to help increase technology sales. Perhaps this all means that music and technology should simply work together as much as possible as opposed to against each other. Let’s take a look at some of the most recent news regarding the music and technology relationship…

Apple-Beats

Apple recently confirmed a decrease in downloads. Maybe this is one of the reasons why Apple acquired Beats earlier this year. Using Beats, Apple can easily gain the kind of simplicity it has been craving in the music streaming sector. In fact, a good example of this can be the recent Southwest Airlines and Apple partnership agreement. Southwest Airlines now offers free music streaming thanks to Apple’s Beats music service!

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Streaming is definitely the way music is heard these days. It is no wonder that Apple is interested in improving their music streaming services and pricing as Spotify revenues rose in 2013 and the music service turned to profit. Spotify also launched a family plan with cheaper subscription options recently as well. Despite all its good news, Spotify was caught a bit off guard when Taylor Swift surprisingly pulled her music from them. It will be interesting to see if this will affect Spotify success.

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Pandora is now giving artists the data it stores from the audience members. However, Pandora is not the only one doing this. Both Spotify and The Next Big Sound have also taken the same initiative. Data enables artists to grow and enhance their careers in a proactive way. By better understanding the audience members, artists are be able to improve musical content they offer and better engage with their followers. It is obvious why data continues to become so important! These companies definitely want to stay ahead of the game by providing artists with this free data.

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Next, news regarding a touchy subject: Piracy! For those that are still trying to illegally download music, Google is now using its search data to point those users towards legal sources through ads whenever words like “free” and “download” are searched in the Google search engine. Piracy has been a continuous problem so it is good to see that Google is playing its part to help regulate music consumption. There are still a large debate questioning whether this approach is enough when it comes to dealing with this issues..

imagesYouTube plans to launch its own subscription service called MusicKey. This is not exactly new news as there have been talks about this for a while now. Although YouTube’s CEO stated she is positive about this subscription service, 25% consumers say they will never pay for a subscription service since they can already find all the music they want using YouTube.

Looking at all these news, it is clear that music and technology continue to be very much connected. Sometimes it can be a complicated relationship. Music and technology have become so closely connected that it makes the relationship an incredibly powerful tool though. Technology alone and music alone cannot succeed in saving the music business. It is by coming together that this relationship can become less complicated as it provides the millennials, those tech-empowered fans, with the ability to become closer to the content they love, align with their socioeconomic surroundings, and follow the new cultural norms. This is what should save the music industry in the future.

To view the article that served as inspiration for this blog post, visit this link – http://blog.midem.com/2014/11/news-review-technology/#.VFoBJZV0zmI

The Tyranny of Choice

Have you ever noticed the immense amount of music that technology allows us to listen to? There are so many choices that it would be impossible to listen to every track out there in one lifetime. This is what a fellow blogger likes to call “The Tyranny of Choice”.  In his blog, he points out simple facts – making relevant points regarding the future of music.

There is a noticeable imbalance in the music industry. There a numerous music services world wide. These music services are focusing on a small percentage of consumers as opposed to targeting a much larger market share. Streaming plays an important rule in the music industry and it has caused cd and download sales to decline. By targeting that small percentage of consumers, music streaming services are simply taking the downloading money and converting it into streaming money. This means the consumers are switching but not spending more. Larger target market is not necessarily being considered meaning there is just revenue transition rather than revenue growth in the music industry.

According to fellow blogger, there are three things to focus on that are predicted to shape the future of digital music – (1) Consumer Behaviour (2) Tech Companies Strategies (3) Income Distribution. Consumer behavior of the next music generation listeners and not the generation transitioning from downloads or cd’s will be the ones music services need to pay attention to. By understanding the next generation, the music services will be able to properly grow and evolve. Technology companies such as Apple, Amazon, and Google control digital music in one way or another. For this same reason, others such as labels and producers can focus specifically on the music while these companies strategize to focus on their own established goals which mostly involve product/service sales. It is a win-win. Finally, artists and songwriters have begun to pay more attention to income distribution. Although it may not happen overnight, the pressure to more evenly distribute this income is an important movement.

Music listeners may not be expected to spend money on downloads or cd’s in the future, however they are expected to listen to the numerous music choices available to them more than ever before. The Tyranny of choice will influence the way we all listen to music. This provides artists and labels with new opportunities though. Because of “the tyranny of choice” technology has created and will continue to create in the future, artists and labels must come together to create partnerships that will allow them to sell an experience – an unique music experience that they can both sell to the next generation listeners. To provide unique music experiences to listeners is what music has always been about so to focus on this same principle in the future despite how technology continues to change our lives is truly a beautiful thing.

To read the blog post and see charts that served as inspiration for this blog post, follow this link – http://musicindustryblog.wordpress.com/2014/09/29/digital-ascendency-the-future-music-forum-keynote/

Musical Nostalgia

I purchased my first CD at a very young age. Holding it in my hands and knowing it in was mine was pretty neat. Playing it over and over again until I knew all the lyrics to every song was an even better feeling. Those days seem to be over though. Technology has provided us all with convenient ways to listen to our music now. Every day it seems as though there is new evidence pointing to the fact that streaming is the evident future in the music industry. Now don’t get me wrong, I absolutely love the effortless convenience that is opening up my Spotify account… listening to my favorite artists as well as easily discovering new ones! Is streaming changing the way we relate to music though?

I am sure I am not alone in saying that there is a certain beauty in owning music from that band you have followed and loved for years. Then again, there is also the music quality you can hear in say a vinyl than you could never hear while streaming that contagious song you can’t get enough of. It is true that streaming exposes us all to unlimited amounts of music we would probably never had discovered or even had the ability to purchase (even if we wanted to). As music consumers… or simply music lovers… we are able to appreciate the technological advances that make life a little easier however, every now and then we are entitled to feel a little nostalgia about the good old days and questioning how streaming is changing our musical experiences.

Article link served as inspiration. Read “Why I Rushed Out To Buy An Apple Classic: Soon It’ll Be Too Late” as it will surely take you for a stroll down your own memory lane. – http://www.nme.com/blogs/nme-blogs/why-i-rushed-out-to-buy-an-apple-ipod-classic-soon-itll-be-too-late

Beats to be taken over by Apple.

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Congratulations to Dr. Dre who might be on his way to becoming the first rapper/ billionaire ever. I bet he didn’t think of that when he was rapping about bitches not being shit.

Commiserations go out to Apple on potentially having just acquired an absolutely shit house product.

Don’t get me wrong, I respect what Beats do – manufacture a bass heavy, ugly, flimsy piece of equipment that is endorsed by one of the most popular rappers of all time. Oh and of course they recently launched a streaming service to rival Spotify.

I do wonder however, whether Steve Jobs would be rolling around in his grave at this new acquisition. In my opinion Beats stands for everything that Apple is not.

What scares me is the power Apple now has with the streaming service. If we think of the industry in waves, the mp3 wave that took out CD’s was completely dominated when Jobs launched I tunes. I wonder if the guys in silicon valley have something up their sleeve and are getting ready to release some sort of new streaming hardware that will blow Spotify away and deem I tunes useless.

While we wait for that, I’m going to put on my AIAIAI TMA1’s and listen to The Chronic.

Apple buying Beats Electronics! Good Move?

Apple’s biggest acquisition till date is the Beats electronics, which started off with headphones and now have diversified to car systems and home electronics, is all set to be acquired by Apple for 3.2 billion $. A good move? I don’t think so!

Beats now also are expanding into the music streaming platform and that is the main reason for the Apple for the acquisition. What changes will apple bring into the hardware of the Beats electronics product is still a mystery.

“They are buying into the future and the future is going to be streaming and subscription,” said Jon Irwin, former president, Rhapsody Inc.

What i do not understand is why cannot Apple invest the same of into iTunes and diversify into streaming? Even the hardware of Beats is not well respected and reputed!

Steve Jobs, never believed in such take-overs and acquisitions,  i think Apple needs him back from the other side!!

What future holds for Beats Electronics after the acquisition, is still not told about!

Source: http://www.bloomberg.com/news/2014-05-08/apple-said-to-be-near-buying-beats-electronics-for-3-2b.html

FIND YOUR GREATNESS

How does Nike sound like? I think that question is very difficult to answer…

The sports company has been using very different genres of music for its campaigns, from electronica to classical music, as you will see in the following videos.

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Find your greatness

Take control with Andres Iniesta and Sarasate’s music

 

I do not have any idea how does the Japanese DJ duo Hifana transformed Nike’s flexible runn+ running shoes into musical instruments. Is it actually possible? Or is it a kind of trick? Anyway the result is spectacular!

How does Nike approach to music? Is there any evidence of integration of music and sports?

Thanks to the evolution of digital music distribution and the proliferation of music streaming services, the company has adapted its strategy and created new products to fit consumer’s demand.

Nike and new music products:

The company, together with Apple has launched Nike+ app, a running application that allows the consumer to listen to any kind of music while practicing sports. The application is available for iPhone and Android and can be purchased on App store.

Additionally, the new iPod nano can be synchronized with iTunes library without connecting an external device or sensor.

Nike has also participated in the design of a video game called Kinect Training for Xbox 360, putting together individual training and music.

Artist endorsement and events:

As well as other companies Nike has partnered with some artist such as Rick Ross, The Neptunes, Rakim, Nas and KRS-One who had appeared in some TV spots.

In addition, Nike and the singer and songwriter Katy B collaborated in the organization of an exclusive event, The First ever Nike Training Club Live Festival, held in London on the 7th of July of 2012 at Old Billingsgate Market. The initiative was specially created for girls and aimed to bring together sport and music. The attendants could participate in some training sessions, get free professional massages or even get daring neon color manicure!

NIKE Training Club

 

 

 

 

 

 

Curiosities:

Nike was actually in trouble in 1987 as the company decided to use The Beatles song “Revolution” in a commercial, without Apple Records, The Beatles’ recording company permission.

As a result, Nike had to pay $250,000 to Capitol Records Inc., which was the owner of the North American licensing rights to the recordings, in order to use the original recording for a year.

Nonetheless, after such incident Yoko Ono gave her authorization to Nike to use John Lennon’s song “Instant Karma” in another advertisement.

Another recent incident occurred in June 2009, when Eddie Van Halen accused Nike of treading on his trademark, regarding the use of graphic stems from his red/white/black striped pattern seen on his “Frankenstein” guitar, which he has held the rights to since 2001. Eddie was asking for the impoundment and destruction of all the Nike Dunk Lows shoes, as well as all profits from its sales and damages.

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What do you think about Nike’s design? Were they using Van Halen’s design, or is it just a coincidence?

References:

http://nikeinc.com

http://nikeinc.com/news/nike-training-club-live

http://www.katybofficial.com/gb/home/

http://www.hiphopdx.com/index/editorials/id.1650/title.all-souled-out-an-analysis-of-hip-hop-endorsements

http://www.rollingstone.com/music/news/eddie-van-halen-sues-nike-over-guitars-signature-color-scheme-20090617

http://business.transworld.net/15967/news/eddie-van-halen-suing-nike-over-dunk-lows/

Monica Manubens

Cloud Wars Heat Up

Storing music on a cloud is not a new thing – Apple entered the market over a year ago by releasing iMatch –  Music in the consumer’s current library is scanned, and any songs available in the iTunes Store is added to the consumers iCloud.  Then consumers can stream their music from the iCloud to any of their iOS devices – for a price of $24.99/year

Google Play recently announced it’s new matching feature with essentially the same offer, with a major exception –

The service is Free.

Google Play limits you to upload 20,000 songs to the service for free plus songs bought in the Google Play store, whereas iMatch’s offer is 25,000 songs plus songs purchased in the iTunes store.  Regardless, the difference of 5,000 songs seems hardly of importance when factoring the price structure of each.  iMatch’s fee and limited nature makes it a hard choice to select in light of Google Play’s offer.  It seams Apple will have to make some changes if it wants to stay competitive in this market.

Spotify is popular – But will it be profitable?

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To most music fans getting used to Spotify or similar services, it feels like music streaming services business is healthy and just starting to take off.  Within the music industry however, it is no secret that music streaming leader Spotify in its current form is an unsustainable business model, losing millions of dollars each year…

Reputable financial analyst PrivCo released an overview of Spotify’s financial situation showing roughly $37.5 million net loss in 2010, and a whopping $60 million net loss in 2011. The financial firm stated that the 2011 numbers were “alarming” and “unsustainable”.  Granted, the company is going through an extensive growth phase, expanding to new countries and hiring new employees, however this is shadowed by the fact that almost every new dollar of revenue is going directly towards paying music companies, largely, the three major industry recording giants holding the rights to most of the world’s popular music repertoire.  PrivCo CEO Sam Hamade expressed one of two things needs to happen to keep the company afloat – “Either the online music royalty payment model to artists and music companies needs to change, which is highly unlikely in the near term given that digital royalties are record companies only growing revenue stream, or Spotify needs to ASAP introduce a tiered subscription system, as opposed to its current flat monthly fee model, which is clearly a broken business model.”

It isn’t clear whether Spotify will introduce a tired subscription system yet, the company is currently betting on turning free users in to paid subscribers.  Entrepreneur and investor Sean Parker has predicted Spotify will take over iTunes in terms of revenue within two years, however this could be majorly derailed if the rumors around iTunes launching it’s own streaming service are true – An Apple streaming solution would be an undeniably hard competitor to beat in winning over the masses of consumers happy with their other Apple products.

 

References/Further Reading

http://www.digitalmusicnews.com/permalink/2012/121005alarming

http://thenextweb.com/insider/2012/10/05/the-royalty-squeeze-spotify-booked-a-59m-net-loss-in-2011-on-244m-in-revenue/

http://www.billboard.biz/bbbiz/industry/digital-and-mobile/business-matters-can-spotify-catch-itunes-1006493952.story

http://www.nme.com/news/miscellaneous/65990