The new year is typically a time for predictions for the year. But at the midway point of the decade, rather than do some short term predictions I think this is a good time to take a look at the longer term outlook for the music industry. Here are five long term music industry predictions:
1 – Disney will become the world’s biggest music company
Consumers are buying less music and there are more ways to easily get free music than ever before, both of which make selling music harder than ever. Major labels have addressed this by doubling down on pop acts (Rihanna, Katy Perry, Rita Ora, Ariana Grande etc.) which have a more predictable route to market. Video (YouTube) and very young audiences (also YouTube) underpin the success of these artists. While the majors have been pivoting around this very specific slice of mainstream, Disney has quietly been building an entire entertainment empire for this generation of pop focused youth. Unlike the majors, Disney has TV shows and channels targeted at each key kids and youth age group and uses them to bring artists through. They start them out kids TV shows such as The Wizards of Waverly Place (Selena Gomez), Hannah Montana (Miley Cyrus) and Sonny With A Chance (Demi Lovato). Disney then very carefully matures these fledgling stars as their audiences age so that by the time they and their audiences are fully fledged teens, they are fully-fledged pop stars. At which point they have shaken off most of their bubble gum imagery and have conveniently acquired a little edge, a specific positioning and a personality. It is a highly effective process. Each of those three Disney stars are only in their early 20’s but already have multiple albums under their belt. Disney will not only continue to excel at this model, they will most likely become the biggest pop label on the planet. Which given where music sales are heading (pop accounted for 44% of the top 10 US album sales in 2014) could well mean Disney even overtakes Universal to become the biggest music company of all.
2 – The western pop music industry will increasingly resemble Bollywood
2014 was the first year film soundtracks accounted for 2 of the top 10 selling US albums (‘Frozen’ and ‘Guardians Of The Galaxy’), generating 4.4 million sales and 30% of the top 10 overall. And both albums were Disney. In India music plays a supporting role to film in revenue terms but is culturally centre stage, the beating heart of Bollywood film. The music and film require depend on each other for context and relevance. We are set for this model to become increasingly pervasive in western markets. Just as video underpins the success of pop stars, it creates an audience bond to music in film and TV, turning the music into the soundtrack of memorable, fun and moving moments. Triggering the same emotional chemistry music does in real life. With music sales still tumbling but movie sales holding up, expect movie soundtracks to become an ever bigger part of music sales, and for the dividing line between film star and pop star to blur entirely. Expect Disney to, again, be the key force.
3 – Live music will lose ground to other live entertainment
Live has been the music industry’s ‘get out of jail free’ card, holding up total revenues while sales revenue declined. The balance of power has shifted with sales revenue now just a third of the total revenue mix, down from 60% at the start of the century. But cracks are already appearing with price increases underpinning much of the live revenue growth in recent years and the big revenue polarised between ageing rockers and pop divas of the moment. There are only weak signs of a next generation of stadium filling rock bands. The big live venues are already looking for alternative ways of getting bums on seats, with TV show spin offs in particular proving successful. Venues and promoters love TV show tie-ups because they bring big TV cross promotion which helps ensure commercial success. TV comedy shows are now doing 10 to 12 night sell outs in 10,000 capacity venues. You don’t see many artists doing that. Shows like Disney On Ice (yes, Disney again) fill out the biggest venues with ease. And it is not just the top end that is moving away from music. Comedians like the UK’s John Bishop play tours that happily play a small club one night and an arena the next. Expect the live market to shift more towards a broader range of entertainment, especially TV tie ins, squeezing out many music acts in the process.
4 – Old world copyright establishments will lose relevance
The fragmented nature of global music rights, especially on the publishing side, has long been a thorn in the side of digital music. The system of multiple national rights bodies and commercial rights owners administering different parts of music rights across the globe hinders the ability of the digital music industry to be truly global. A handful of rights bodies are pushing the innovation needle, others are not. The distinctions between recording, performance, mechanical etc. served well in the analogue era when there was a clear distinction between a sale and a performance. But in the streaming dominated landscape they are less useful. Additionally the entire range of audio visual elements that an artist comprises in the digital era can be prohibitively difficult to put into a single product. This is because the rights are usually held by so many different stakeholders, each with different priorities and appetites for risk. Expect music companies, artists and their managers to increasingly collect as many rights as possible into one place so they can create multimedia experiences without having to navigate a licensing minefield. In doing so, more and more monetization will happen outside of the traditional licensing frameworks. Whether that be because all of the revenue occurs in a single platform (e.g. YouTube) or because new licensing /collection bodies are used such as Audiam or Global Rights Management administer the rights. Creative Commons might play a bigger role but the real focus is going to be on being able to license more easily AND monetize more effectively.
5– Labels will become agencies
Finally we have agencies or what you might call labels, but I’m going to call them agencies, because that is what they need to become. The label model is already going under dramatic transformation with the advent of label services companies like Cooking Vinyl’s Essential and Kobalt’s AWAL, and of fan funding platforms like Pledge and Kick Starter. All of these are parts of the story of the 21st century label, where the relationship between label and artist is progressively transformed from contracted employee to that of an agency-client model. Labels that follow this model will be the success stories. And these labels will also have to stop thinking within the old world constraints of what constitutes the work of a label versus a publisher versus a creative agency versus a dev company. In the multimedia digital era a 21st century labels needs to do all of this and be able to work in partnership with the creator to exploit all those rights by having them together under one roof.
Streaming is changing the music world right here, right now, and there is an understandable amount of focus on it. But it is just one part of a rapidly changing music industry. This decade has already wrought more fundamental change than any previous one and the rate of change is going to continue to accelerate for the next five years. All of the rules are being rewritten, all of the reference points redefined. This is nothing short of the birth of a new music industry. The blessing of a generation is to be born into interesting times, and these times are most certainly that.
Interesting ideas, for sure, though I’m not entirely sure I agree across the board. As much as Disney does exactly what you stated in item 1, they haven’t had success since Selena Gomez. They’ve tried, for sure, but their recent television stars/singers haven’t ignited the way the trifecta of Miley/Demi/Selena did. With the money Disney has to invest in television, music, touring, and promotion, they’re bound to hit again, but they haven’t in years.
With respect to #2, I sure hope so! Have you seen the video by Stone and Space that’s a hip hop track set to a Bollywood film scene, synced perfectly? It’s kind of amazing. Anyway- Only good can come from the arts cross-pollinating.
#4 Absolutely, entirely, completely agree. Not sure if you’re familiar with The VT- there’s quite a strong (positive) buzz in the industry about them. It’s a streaming video channel focusing on indie artists and they’ve built their own licensing schema. I was happy to join their team a few months ago- interesting stuff for sure!
As always, thanks for your thoughts, I always enjoy your posts. 🙂
Thanks for the interesting comments Christine. Thanks for the Stone and Space and The VT tops – will check them out
Hi Mark —
Wow, yes, was delighted to find this article. Everything you say is spot on accurate. Except, as Christine pointed out, Disney. There will be a number one winner of the music industry, but it won’t be Disney.
Here’s more info on the vt:
Reach out anytime and say hi. I love chatting with smart people like yourself.
founder/ceo, the vt
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#4 and #5 are perhaps things that ‘should’ take place – as opposed to ‘will’ take place. It has been close to 2 decades now after the Mp3 made an appearance and took over the world, and the fact is that the industry has not really adapted itself to that change yet. Knowing this, the inertia of the system cannot and should not be underestimated. Practically speaking, this would imply that the changes (along the lines of #4 and #5) will more likely take place in bits and pieces and involving only a small and disjointed fraction of artists and labels. For the big labels to make that transition would be a colossal effort considering how much they have resisted so far.
Great big +1!
Akshay – agree that the quasi monopolistic control of supply the major labels and publishers exert means that any change happens far more slowly than it would in a fully open market. However we are already seeing some change. Last year saw each of the majors ratchet up their label services divisions, even poaching staff from some of the indie label services companies. They are faced with a generation of artists who were signed just as artist-fan engagement was really taking off (so they know what they can achieve themselves) that are coming to the end of their contracts. Many are saying ‘I’d rather go label services than take the restrictive deal you’re offering’. So the majors are having to have robust label services offerings to retain some of these. They are also great tools for poaching end of contract artists from other majors. So yes, this change will be slow and largely piecemeal, especially 5, but I am encouraged by how much change happened in 2014.
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Awesome post, Mark.
The ties between music, film and TV go back. Much of the Great American Songbook came from movies: White Christmas, Over the Rainbow, Cheek to Cheek and many more songs. In the 50s, Rock Around the Clock sold modestly for a year and then shook the world when it was heard under the opening credits for a film, Blackboard Jungle. The Beatles had A Hard Days’ Night, Frank Sinatra had From Here to Eternity and Elvis had Jailhouse Rock, King Creole and over 30 more movies.
Meanwhile, the idea that Hollywood could take a recording career from child star to maturity (with a little edge) reached a zenith with Judy Garland, while TV did it for with Rick Nelson. Ed Sullivan introduced Elvis and the Beatles to America’s living room, Dick Clark’s American Bandstand was the YouTube of its day and TV made the Monkees. And everybody, from Sonny & Cher to Johnny Cash, had a TV show back then.
This takes nothing away from your perceptive post. It just shows that what’s new is not so new.
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Interesting prediction: “2 – The western pop music industry will increasingly resemble Bollywood
(…) In India music plays a supporting role to film in revenue terms but is culturally centre stage, the beating heart of Bollywood film. The music and film require depend on each other for context and relevance. We are set for this model to become increasingly pervasive in western markets.”
I see people questioning Disney’s ability to dominate the market; what about Arianne Grande – she’s the hottest pop act on the Globe right now…
Great article! The “agency” part is what we really liked. Even in the video production industry, there is drop. Artists are releasing lyric videos following cheap music videos. The industry even give a best lyric video production award! Check out 351 Studio and you’ll see the prices on lyric videos!
Ariana Grande wasn’t a Disney starlet, she was on a Nickelodeon show.
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