Marshmello Just Live Streamed on Fortnite…So Just What is a Concert?

On Saturday I watched my 12 year old son scoff down his meal so that he could rush upstairs to get logged on with his friends in time for a Marshmello live streamed event on Fortnite. As you can see from the video (click the link in the image to go through to a MIDiA post with the video) this was Marshmello appearing as a Fortnite character, on stage with his music playing. Meanwhile Fortnite players moved around the ‘concert venue’ showing off their dance moves – all of which of course had been purchased in app with Fortnite VBucks.

marshmello fortnite

(Click the image to link through to the MIDiA blog which includes a video clip)

For my son and his friends this was every bit a shared live experience, each of them talking to each other via Xbox Live and dancing with each other on screen. In-game live experiences like this are nothing new, but it may just be that we are beginning to get to a tipping point in shared gaming experiences for Gen Z that will shape their entertainment expectations for years to come. Tweens and teens are already spending more time socializing via social media than real world contact, connected gaming is adding to that mix. Whereas most games played with friends have been first and foremost a shared gaming experience, Fortnite is teaching a new generation that the game itself is merely a platform for shared experiences. Meanwhile Marshmello gets to ‘play’ to potentially millions of new fans right across the globe.

Welcome to the future of live entertainment…..or rather, welcome to one of the futures of live entertainment.

Making Free Pay

2018 was a big year for subscriptions, across music (Spotify on target to hit 92 million subscribers), video (global subscriptions passed half a billion), games (98 million Xbox Live and PlayStation Plus subscribers) and news (New York Times 2.5 million digital subscribers). The age of digital subscriptions is inarguably upon us, but subscriptions are part of the equation not the whole answer. They have grown strongly to date, will continue to do so for some time and are clearly most appealing to rights holders. However, subscriptions only have a finite amount of opportunity—higher in some industries than others, but finite nonetheless. The majority of consumers consume content for free, especially so in digital environments. Although the free skew of the web is being rebalanced, most consumers still will not pay. This means ad-supported strategies are going to play a growing role in the digital economy. But set against the backdrop of growing consumer privacy concerns, we will see data become a new battle ground.

Industry fault lines are emerging

Three quotes from leading digital executives illustrate well the fault lines which are emerging in the digital content marketplace:

“[Ad supported] It allows us to reach much, much deeper into the market,” Gustav Söderström, Spotify

“To me it’s creepy when I look at something and all of a sudden it’s chasing me all the way across the web. I don’t like that,” Tim Cook, Apple

“It’s up to us to take [subscribers’] money and turn it into great content for their viewing benefit,”Reed Hastings, Netflix

None of those quotes are any more right or wrong than the other. Instead they reflect the different assets each company has, and thus where they need to seek revenue. Spotify has 200 million users but only half of them pay.  Spotify cannot afford to simply write off the half that won’t subscribe as an expensively maintained marketing list. It needs to monetise them through ads too. Apple is a hardware company pivoting further into services because it needs to increase device margins, so it can afford to snub ad supported models and position around being a trusted keeper of its users’ data. Netflix is a business that has focused solely on subscriptions and so can afford to take pot shots at competitors like Hulu which serve ads. However, Netflix can only hike its prices so many timesbefore it has to start looking elsewhere for more revenue; so ads may be on their way, whatever Reed Hastings may say in public.

The three currencies of digital content

Consumers have three basic currencies with which the can pay:

  1. Attention
  2. Data
  3. Money

Money is the cleanest transaction and usually, but not always, comes with a few strings attached. Data is at the other end of the spectrum, a resource that is harvested with our technical permission but rarely granted by us fully willingly, as the choice is often a trade-off between not sharing data and not getting access to content and services. The weaponisation of consumer data by the likes of Cambridge Analytica only intensifies the mistrust. Finally, attention, the currency that we all expend whether behind paywalls or on ad supported destinations. With the Attention Economy now at peak, attention is becoming fought for with ever fiercer intensity. Paywalls and closed ecosystems are among the best tools for locking in users’ attention. As we enter the next phase of the digital content business, data will become ever more important assets for many content companies, while those who can afford to focus on premium revenue alone (e.g. Apple) will differentiate on not exploiting data.

Privacy as a product

So, expect the next few years to be defined as a tale of two markets, with data protectors on one side and data exploiters on the other. Apple has set out its stall as the defender of consumer privacy as a counter weight to Facebook and Google, whose businesses depend upon selling their consumers’ data to advertisers. The Cambridge Analytica scandal was the start rather than the end. Companies that can — i.e. those that do not depend upon ad revenue — will start to position user privacy as a product differentiator. Amazon is the interesting one as it has a burgeoning ad business but not so big that it could opt to start putting user privacy first. The alternative would be to let Apple be the only tech major to differentiate on privacy, an advantage Amazon may not be willing to grant.

The topics covered in MIDiA’s March 27 event ‘Making Free Pay’.The event will be in central London and is free-to-attend (£20 refundable deposit required). We will be presenting our latest data on streaming ad revenue as well as diving deep into the most important challenges of ad supported business models with a panel featuring executives from Vevo, UK TV and Essence Global. Sign up now as places are going fast. For any more information on the event and for sponsorship opportunities, email dara@midiaresearch.com 

Spotify, Netflix And Instagram Make Gains In Q2 2017

Since Q4 2016 MIDiA Research has been fielding a quarterly tracker survey across the US, UK, Canada and Australia to build a proprietary dataset that provides a unique insight into how digital consumer trends are evolving quarter-upon-quarter. Through the tracker we monitor weekly active usage of apps for streaming music, streaming video, games, social and messaging. We also measure the shifts in key consumer behaviours, such as curated playlist listening, binge watching and subscriptions, in each of these sectors each quarter. We have structured the data so that clients can explore each app and behaviour by demographics, and, crucially, users can examine how much each app overlaps with others and with all the 40 different behaviours we track. We recently published a report for MIDiA’s paid subscribers analysing key trends across the first three quarters of our tracker. Here are some of key insights from the report. To find out more about how to get access to MIDiA’s Quarterly Trends report, email stephen@midiaresearch.com.

The leading apps in each of the categories tracked are largely consistent across all of the countries surveyed and they are also the big names that are familiar to all (see figure above). However, where things get interesting is in a) the variations in penetration across countries and b) how usage has evolved over successive quarters. For example:

quarterly trends midia figure 1

  • Messaging apps on the rise: Weekly Facebook usage was up slightly in the US between Q4 2016 and Q2 2017, but down in the UK. Over the same period WhatsApp was flat in the US but up slightly, along with Instagram, in the UK. WhatsApp penetration stood at just 11% in the US in Q2 2017 but 33% in the UK, while penetration in Australia and Canada laid in the middle of those two points.
  • Netflix growing but not in the UK: YouTube is still the standout video destination in terms of weekly usage across all the markets tracked. However, growth has slowed in these markets, with penetration going down slightly over the three quarters. YouTube’s loss is Netflix’s gain, with the streaming TV platform’s usage increasing each quarter. Though, again, there is an intriguing country level exception: Netflix is growing everywhere except the UK where weekly usage was flat over the period.

top streaming music apps in q2 2017, spotify, youtube, apple music, soundcloud, amazon, musical.ly

YouTube is the world’s leading streaming music app and this is true of the larger, mature markets. The continual breaking of YouTube music streaming records by the likes of Shakira and Luis Fonsi point to a renaissance in YouTube as a music streaming platform. However, the origin of those artists point to the location of YouTube’s music momentum: Latin America. Meanwhile, across the US, UK, Canada and Australia, weekly usage of YouTube as a music app was flat, and down actually in Australia. Most of the music apps we tracked had a dip in Q1 2017 but in the main held ranking and overall usage. Deezer saw a small rise while Soundcloud fell slightly. Spotify was the big winner, gaining penetration to close the gap on YouTube, and becoming the leading standalone music app. In the UK, Spotify surpassed YouTube for music among 16-19 year olds, hinting at a strong future for Spotify among Gen Z. Talking of Gen Z, lip synching apps Musical.ly and Dubsmash maintained momentum across the period, something other music messaging apps have previously failed to do this late on in their lives. These sort of apps, though niche in scale, point to what Gen Z want from their social music experiences.

These are just some of the very high-level trends, and there is much more in the report itself. If you are a MIDiA subscription client you can access the report and data right away here. If you are not yet a client and would like to learn more about how to get the report and the other benefits of being a MIDiA client email Stephen@midiaresearch.com.

Welcome To The Post-DIY Era

I recently took part in the True Music Forum in Madrid, an event organized by Boiler Room. I was on a panel that explored whether DIY is now coming of age with a host of high profile artists, most of them urban artists, bypassing or twisting the traditional label model and still achieving stand-out success. On the surface, these look like golden years for DIY, and in many ways they are, but much of what is happening at the top end of the scale has little to do with DIY. Streaming is transforming how artists view recorded music income and is making it possible for artists to pick and choose what label capabilities they want. But more often than not, it is a variation of the label model that succeeds rather than a replacement of it. This is the start of the post-DIY movement.

Madrid True Music Forum, March 8th-28

The First Wave Of DIY

Firstly, to be clear, DIY is alive and well, better than it has ever been in fact. With labels increasingly only signing artists once they have seen them build up following and ‘a story’, it is becoming increasingly common for artists to spend the formative stages of their careers ‘DIY’, releasing their own music, managing their social campaigns, making their own videos, booking their own tours etc. Added to that, the combination of streaming, direct-to-fan platforms and social apps have combined to make it possible to build niche audiences on a global scale. So it is now possible for a new tier of artists to exist, a tier of artists that may never dent the charts (for whatever they may be worth these days) but that can build solid, sustainable careers by engaging their fans directly. Stalwarts like Bandcamp and CD Baby have never had it so good, while a whole crop of new entrants, such as the much hyped BandLab is emerging to drive the market forward. And of course, Soundcloud, for all its financial challenges, provides artists with a platform to engage massive audiences globally without need for any middleman whatsoever.

DIY Versus Empowered Superstars

That is the DIY movement that will go down in history as one of the most culturally significant legacies of the Napster market shock. An organic, grass roots musicians’ revolution. Now though, we are seeing the emergence of a more commercially minded take on DIY, one that draws on the practices of its predecessor but that combines them with the big label model to take full advantage of the best of both worlds. This new breed of superstar DIY artist enjoys the benefit of fiercely held independence with world class distribution and marketing. They are taking the tools of DIY but not all of the ethos. The superstar DIY artist typically builds a strong brand and buzz (and often, but not always, a big live following) and then uses that as a platform to strike a deal with a major label (or a major label subsidiary company) to get the benefits of major label scale without giving up control (nor masters). This can take various forms, such as:

In each scenario the artist retains large amounts of control (or at least more than in a traditional label deal) but gets the support of world class, global infrastructure and marketing. The artists picks the services s/he wants, like an advertiser does with a full- service ad agency. The label services and standalone distributor models have been around for some time, but now they are being used by business savvy, super ambitious superstars in-the-making. And the artist gets to retain an aura of authenticity and independence.

For those artists that want to push the needle even further, streaming services are emerging as an additional weapon in the armoury. Chance the Rapper revealed that Apple paid him $500,000 to become the exclusive streaming partner for ‘Coloring Book’, following hot on the heels of Frank Ocean’s Apple Music exclusive for ‘Blonde’. Apple is setting itself up as a modern day equivalent of the Medici – the medieval Italian family that was a driving force in the Renaissance through its patronage of artists such as Rafael, Leonardo Da Vinci and Michelangelo. Some time or another, Spotify will follow Apple’s lead. The superstar artist fits this streaming-service-as-label model best because an artist with big potential is going to deliver much better ROI for streaming services that are eager to drive market share and differentiation via original content.

Hip Hop Is Setting The Innovation Bar

Urban music, and hip hop in particular, has become a hotbed of artist-led business innovation. Although hip hop has always had stronger commercial sensibilities than other genres, streaming has brought the business innovation to the fore, ranging from the original hip hop superstar businessman Jay Z and his Tidal service, through Frank Ocean’s Apple Music released ‘Blonde’ to Stormzy’s streaming record breaking streaming success.  And the innovation is happening at the grass roots of hip hop too. As the brilliant Kieran Yates noted on the Boiler Room DIY panel, many UK Grime artists are now signing publishing deals before label deals as a) this can often mean bigger advances in today’s indie music market, and b) there is a perception that this means giving up less control, which in turn empowers the artist to strike a better deal with a label, or label-owned company. This also opens up a world of opportunity for independent music marketing agencies etc who can become part of new, agile teams.

Streaming has been continually rewriting the rule book for many years now, but we are entering a period of even faster change, with many of the more fundamental effects being the indirect consequences, such as the rise of post-DIY. It would be wrong, however, to think of this as a ‘death of the label’ narrative. Because the labels (majors and indies) are being smart enough to be as flexible and agile as artists need them to be. Artists are changing and labels are changing just as fast to meet their new needs and terms of reference. Perhaps, the best way to capture the approach of the new era of post-DIY artist is to go back to Jay Z’s classic ‘Diamonds From Sierra Leone’ lyric: I’m not a businessman; I’m a business, man!

 

How Ed Sheeran Broke The Charts

Unknown.jpegUnless you have been hiding under a stone on Mars this last few weeks you will have struggled not to hear or see some clip of Ed Sheeran one way or another. Atlantic Record’s carpet bombing market campaign has tipped Sheeran into global ubiquity. At the centre of this approach is a ‘be everywhere’ streaming strategy which saw Sheeran clock up over 68 million Spotify streams in 1 day (a record for any single artist). Though, the 1 billion views he clocked up for ‘Divide’ on YouTube shows where the real streaming audience of scale resides. But what makes Sheeran’s ‘Divide’ campaign stand out is what it has done to the charts. Or rather, the weaknesses in the charts that ‘Divide’ shines a light on.

What Role Should Streaming Era Charts Play?

As of March 13th, Ed Sheeran’s ‘Divide’ album accounts for 9 of the UK top 10 singles, while all of the 16 tracks on the album are in the top 20. If there was ever a sign that streaming is breaking the charts then this is it.

The writing has been on the wall for charts ever since the recorded music business decided to incorporate streams into them. Doing so was a perfectly understandable move but it is one that has incapacitated the charts. As we predicted back in 2014, incorporating streams into charts would fall over because the charts were being forced into trying to simultaneously measure sales trends and airplay. As I wrote 3 years ago: “try simultaneously [measuring airplay] with measuring sales and you end up with a diluted mish mash that does not do either job properly.”

Underpinning all of this is an existential industry debate over whether streaming is replacing retail or radio. In truth, of course it is replacing both, but which is it doing more? The answer to that determines the role charts should be trying to play. However, the answer looks very different depending on where you sit. If you are a record label you see streaming growing by 57% in 2016 to reach $5.4 billion. Streaming is indeed becoming the future of retail. But it is also how you break artists and releases now, therefore it is a bit of both. Go over to the artist side of the equation and streaming becomes a crucial tool for driving exposure and helping sell concert tickets. As Ed Sheeran himself said during his last album promo cycle, for him it is all about live. Indeed, for most successful artists, recorded music revenue is just a small part of the revenue mix. So at its most extreme, streaming is a marketing campaign that pays you instead of you paying for it.

Reach Or Engagement?

In the old charts model an Ed Sheeran super fan buying ‘Divide’ and playing it a hundred times in the first week would only show as one sale, and an album sale at that. There would be no impact on the singles chart. But in the current UK streaming charts, not only does that fan’s album listening now get counted in the singles charts (instead of just the album charts), the resulting 1,600 streams (16 tracks*100) become 160 chart placings (100 streams = 1 sale for singles charts). Consequently, the charts are conflating audience reach with audience engagement. It is the equivalent of Facebook merging Monthly Active Users and Daily Video Views into a single metric. It wouldn’t work for Facebook and it just doesn’t work for music.

A Fiendishly Difficult Problem To Fix

There is no doubt that ‘Divide’ is a fantastically successful and popular album, the problem is that because the charts are conflating sales with consumption we simply don’t know just how successful it really is. And that does a disservice to both Sheeran and his fans. Don’t get me wrong, I truly feel for the various charts organizations across the globe. This is a fiendishly difficult problem to fix, but the current solution just isn’t working. In all likelihood, a dynamic solution is going to be needed, one that has the flexibility to evolve as the streaming market and its industry role changes.

The Time May Have Come For A Separation Into 2 Charts

Ultimately the recorded music business needs to decide what it wants the charts to measure. In old parlance: sales versus airplay, in contemporary terms: reach versus engagement. One near term fix would be to only consider cached streams towards the charts (perhaps with a smaller deflator than the current 100). This would have the advantage of making the measure more reach focused rather than engagement led. It would also have the effect of reducing the impact on ‘push’ curated playlists, which depending on where you sit, can be either an entirely good thing or an entirely bad thing.

If such an approach was taken then some sort of purer engagement chart would need creating to sit alongside the main chart, one that weighted total streams alongside traditional radio. The argument for a streaming-led airplay chart is even stronger than revising the sales chart. With playlists now accounting for 58% of all streams (see MIDiA’s Streaming Music Healthcheck report for more) and curated playlists a third of those, streaming is becoming less about on-demand and more about lean back, radio-like experiences. Streaming is seemingly making radio programmers of the entire recorded music business. It is time for a chart that reflects this change.

‘Divide’ is an exceptional album in terms of commercial performance and audience reach, as is its impact on the charts. But in the latter respect, it is simply a trail blazer for the way in which big albums are going to play out on streaming. ‘Divide’ might not be the hair that breaks the camel’s back but it has certainly fractured it.

Global Recorded Music Revenues Grew By $1.1 Billion In 2016

Following on from the global market share numbers we released on Sunday, here are our findings regarding the growth of the overall market.

Throughout 2016 as the major label earnings were coming in there was a growing awareness that 2016 was going to be a landmark year for the recorded music business. It finally looked like streaming was going to push the industry into growth. Now with full year numbers in, the picture is even more positive than it first appeared. The recorded music market grew by 7% in 2016, adding $1.1 billion, reaching $16.1 billion, by far the largest growth the recorded music business has experienced since Napster and co pushed revenues into free fall.

2nd-release-graphic

While it is too early to state that the corner has been turned, this is clearly a turning point of some form for the business. Underpinning the growth was streaming which grew by 57% in 2016 to reach $5.4 billion, up from $3.5 billion in 2015. Spotify has been key to this growth, accounting for 43% of the 106.3 million subscribers at the end of 2016. 2017 should see further strong streaming growth with another 40.3 million subscribers added, more than the 38.8 added in 2016. Apple Music and Deezer also both contributed strongly to growth and market share. Additionally, Amazon upped its game in 2016 and the introduction of the $3.99 Amazon Prime Music Unlimited Echo bundle could open up swathes of new, more mainstream users.mrm1703-fig0-5

Based strictly upon the recorded music revenue that is reported in financial accounts by the major record labels and / or their parent companies combined with trade association and collection society data, the 3 majors labels collectively generated $11 billion of gross revenue in 2016. Universal Music generated the most with $4.6 billion representing 28.9% of the market total. Sony followed with $3.6 billion (22.4%) and Warner with $2.8 billion (17.4%). These numbers do not include any corrections for any independent revenues that are recognised by major labels because they are distributed by majors or major owned distributors. Thus the ‘actual’ independent share will be higher but can only be accurately measured with a separate survey, so watch out for WIN’s forthcoming indie market share study that will do exactly this.

Volatile currency markets played a role in shaping the 2016 picture, with Sony’s revenues at the original Yen values increasing by just 0.9% but 13% in US dollar terms. In original currency terms, Warner Music was the standout success of 2016, with revenues increasing 11%.

To be utterly clear, these numbers represent the recorded music revenue that each of these companies report to their shareholders and to the financial markets. This is market share based purely on publically stated, financially regulated and audited filings. No more, no less. In this specific context record label recorded market share is simple arithmetic: the record label’s reported recorded music revenue divided by total global recorded music.

Conclusions

The recorded music industry changed gear in 2016 and the outlook is positive also with revenue looks set to be on an upward trajectory over the next few years. However, successive quarterly growth is not guaranteed. Streaming will have to work extra hard to offset the impact of continued legacy format declines as the 18% download revenue decline in 2016 illustrates. Thus, the midterm outlook is as much about legacy format transition as it is streaming growth. If streaming can outrun tumbling download and CD revenues as those walls come crashing down, then good times are indeed here.

Quick Take: Crowdmix Bites The Dust

6a00d83451b36c69e201bb087c7c61970d-600wiCrowdmix was one of those start ups that promised to change the world. It was going to be a social network focused around music that would transform how people discover music and how audiences and influencers interact. Now it is going into administration. Crowdmix suffered from many things, not least a confused value proposition that no-one outside of Crowdmix seemed to be able to explain properly (so it failed the elevator pitch test). But more importantly Crowdmix failed because it played the venture game too faithfully. In the current venture environment, you need to be a ‘game changer’ to unlock significant scale investment. Which is fine, except that only a tiny handful of companies are ever genuine game changers. So what happens is that too many companies try to live up to inflated promises rather than focusing on building viable products and business models. Every company has to be the ‘Uber or Snapchat of [insert industry]’.

Crowdmix convinced itself it could build an entire new social network around music. It couldn’t because of 3 reasons:

  1. Music is fundamentally not important enough to enough people to build any sort of scale of social network around it
  2. As Google learned the hard way, there is only room for one major scale social network
  3. Social networks are yesterday’s technology. They are how Digital Immigrants and older Millennials interact digitally. Messaging apps have replaced social networks for Gen Z and younger millennials

The average life span of a digital music start up is 5.8 years with an average investment of $79.7 million (though those numbers are skewed up by Spotify’s $1.6bn). Crowdmix made it to 3 years and through $18 million, so below average on both counts. It was a nice enough – if slightly confused – idea that made the simple mistake of believing it could change the world.

Beyoncé And The Growing Importance Of First Week Sales

Beyoncé’s team will be rightly feeling pretty pleased with themselves right now, having created a massive buzz around her eponymously titled fifth studio album by deliberately creating absolutely no buzz whatsoever prior to its release on Friday 13th.  By doing something a little different with digital they have managed to get swathes of media coverage, cutting through in a manner that could only be dreamed of with a traditional music marketing campaign.  Showcasing a big digital gimmick is a reasonably well used trick by established artists wanting to cut through, whether that be Radiohead’s ‘In Rainbows’ pay what you like experiment or Daft Punk’s ‘Random Access Memories’ iTunes exclusive.  There of course many serious permutations of the ‘Beyoncé’ release, both in terms of product strategy (e.g. the integration of video) as well as marketing (turning the traditional album build-up strategy on its head).  But of most significance is what it says about the growing role of first week sales.

beyonce and taylor swift final

Prior to the release of this album Beyoncé’s sales were in sharp decline, from a peak of 4.9 million US sales for ‘Dangerously in Love’ in 2003 to just 1.4 million for ‘4’ in 2011 (see figure).  The total market decline in album sales was clearly a mitigating factor but the rate at which Top 10 US album sales declined over the same period – 50% – was significantly less than the 71% by which her album sales declined.  Beyoncé’s team needed something clever to ensure that the latest album didn’t continue the downward trend.  Doubling down on first week sales was a smart move.  It combined the novelty of the tactic, the creation of a sense of scarcity by being an iTunes exclusive for one week and the ability to mobilize her core fans into buying in a concentrated manner and thus increase the odds of pushing the album to the number one spot on its debut full week.

First week sales have become a crucial marketing tool for big artists, with efforts focused on concentrating sales to build the platform for the rest of the marketing and sales strategies.  First week sales of ‘Beyoncé’ look set to represent 30% of all sales, a considerable rise from the 6% for ‘Dangerously in Love’.  As impressive as ‘Beyoncé’s expected 600,000 first week sales are though, the record for US first week sales was set last year by Taylor Swift’s ‘Red’ with an impressive 1.2 million.  In many respects Taylor Swift’s album sales trajectory is similar to Beyoncé’s even though she is in an earlier stage of her career.  Again the decline in total music sales plays a key role, but over the period Swift managed to ever so slightly buck the trend, declining by 25% instead of 26%. (Though if the high water mark of her second album ‘Fearless’ is used then the decline is 41% compared to a Top 10 rate of 5%.)

What unites Taylor Swift and Beyoncé is the growing importance of first week sales.  Both are suffering declining album sales as a result of broader consumer trends, and both have concentrated ever larger proportions of sales into the first week of release.  Consequently for Beyoncé first week sales volumes have increased by 89% while total sales declined by 71%.  For Swift first week sales have increased by 218% while total sales fell by a quarter.  Other artists have woken up to the importance of the first week sales springboard too, not least Daft Punk who secured first week sales of 339,000 for ‘Random Access Memories’ representing 44% of all US sales to date. By contrast their last album ‘Human After All’ sold just 127,000 in the US.

As music sales continue to dwindle artists’ release teams have to get increasingly creative about how they get the most bang for their marketing buck. Expect the first week sales focus to sharpen even further now for frontline global scale artists.

Why Full Albums Need to Go from YouTube Right Away

YouTube has long been the digital music anomaly: hugely successful, almost free of criticism but with a pitifully small pay-per-stream rate (below half that of Spotify, who does get criticism, and some).  YouTube is now on the verge of launching a subscription product and this will hopefully go some way of addressing the fact it has made the marketing journey the consumption destination.  But the music industry should keep its aspirations in check, not just about the potential impact of the service, but also – and perhaps most importantly – because of YouTube’s intent.

Google is a rights frenemy.  Rights frenemies strike a careful balance between maintaining good relations with rights holders on one side of their business but testing the limits on the other side. They pursue a do first, ask forgiveness later strategy.  Thus all the while Google is launching two music subscription services (Google Play Music All Access and the forthcoming YouTube offering) it is also lobbying for copyright reform and posting a link to chillingeffects.org for every successful copyright takedown.  In other words Google talks the talk but only reluctantly so and it does the absolute minimum of walking the walk.

Nowhere is this approach more apparent in YouTube and the presence of user uploaded ‘full albums’.   A coherent argument can be made that 383 million views of Miley Cyrus’s ‘Wrecking Ball’ Vevo video delivered clear benefits to the artist and her team (both though direct Vevo advertising and the vast exposure).  Full length albums ripped into YouTube by users have no such benefit.  In fact labels in the main do what they can to remove them using YouTube’s takedown process.  If Google was a rights ally rather than a rights frenemy it wouldn’t solely wait to be told to take stuff down, at least for the really obvious and high profile stuff, but it doesn’t.

yt1

Take a look at these top search results for Adele, U2, the Red Hot Chili Peppers and the Beatles (see figure 1).  The full album results are high lighted in red, many of which have hundreds of thousands of views each, in the case of Adele’s ‘21’ it is more than 1 million, and some have been live for more than a year.  In the case of the Beatles all of the top results are full albums.  I doubt that the Beatles spent the best part of a decade not licensing to iTunes in order to suddenly throw it all straight up on YouTube.

yt3

There are also endless ripped live DVDs and recorded TV broadcasts of live concerts (see figure 2). It’s pretty hard to see why somebody would want to buy a live DVD of a U2 show when they can get the entire show in 1080p HD on YouTube.  And of course because it is a continual 2 hours and 22 minutes of video the viewing experience will be virtually ad free, save for a 30 second pre-roll and the odd pop up which can easily be clicked off.  The only winner here in business terms is YouTube.

Not all the blame can be laid at Google’s feet though: these examples were found immediately, with no effort, so it is inconceivable that someone somewhere in each of the respective labels doesn’t also know about this.  Thus someone has taken the decision in some of these instances to take the benefit of the ‘exposure’ in return for cannibalizing sales of the exact same music the exposure is supposed to drive sales of.  It is this conflicted view of YouTube (i.e. ‘we couldn’t sell as much music without it even though we lose sales because of it) that needs to be fixed.  Google can hardly be blamed for having a schizophrenic approach to the music industry if the industry does exactly the same back.

But relationship issues notwithstanding, full albums need to disappear from YouTube right now. They need to do so if for no other reason than to level the playing field for those music services that pay back at higher rates to rights owners and that actually try to get consumers to pay for music.  Labels and Google, bang your respective heads together!

Lady Gaga, O2 Tracks and the Reinvention of the Pre-Release Sale Cycle

Back in the glory days of music sales, long before the web had done away with scarcity, albums and singles could hit the top of the charts on pre-sales alone.  Those days are long gone, but exclusive pre-release listening initiatives are beginning to reinvent the pre-release sale cycle.  There have been a number of diverse efforts of late including Daft Punk’s ‘Random Access Memories’ being streamed exclusively on iTunes a week prior to release and Jay-Z’s Samsung ‘Magna Carta Holy Grail’ hard bundle.   This week sees the arrival of another high profile artist effort: Lady Gaga’s ‘Artpop’ is going to be available one week ahead of release exclusively in the UK on mobile music service O2 Tracks.  Done right, pre-release digital previews could be a crucial shot in the arm for music sales.

The debate around whether streaming cannibalizes downloads is going to run for a few years yet, and we’ll probably only have enough data to draw definitive conclusions when streaming’s ascent and downloading’s descent are irrevocably set.  Until then, the challenge is how best to leverage the capabilities of existing digital platforms to drive sales of both downloads and good old fashioned CDs and LPs.  Previewing on an all your can eat streaming service will always both drive and cannibalize sales, just in the same way that radio has always done so.  But build the preview experience into the structure of a music store and the chances of conversion are much higher.  Daft Punk’s iTunes preview was a run away success because it was in the heart of the globe’s biggest music retailer (though of course the impact of the uber effective marketing campaign cannot be discounted).

Powered by UK music start up MusicQubed, O2 Tracks is far from a download store (it delivers users a small selection of handpicked playlists for £1 a week) but it is nonetheless a proven driver of music sales.  MusicQubed reports that O2 Tracks users frequently click to purchase tracks in the app, with stores such as iTunes providing the fulfillment. Thus O2 Tracks is an opportunity to drive hype (O2 are investing heavily in marketing the preview project) and to drive sales.

Lady Gaga is truly a digital era artist, with music sales that are strong but overshadowed by super high social engagement metrics such as Facebook Likes and YouTube views (see this chart for more). So while Lady Gaga’s management will be most interested in the strong marketing support from O2 and will in part measure success in terms of social footprint, her label Polydor will of course be paying much closer attention to conversions to sales.  O2 Tracks should deliver on both counts.

As more pre-release digital initiatives are run we will get a better sense of what works best, and where.  As that data builds I expect a clear case to emerge of a more structured and consistent approach to pre-release marketing.  A crucial ingredient will be exclusive extra content, not just the album itself (the O2 Tracks ‘Artpop’ preview includes an eight minute interview with Lady Gaga). This is the sort of content that delivers genuine added value to core fans of any given artist and that helps build even more reason for fans to listen to pre-release album previews.  The days of albums regularly topping the charts on pre-sales alone may be a thing of the past, but the pre-release sales cycle is waking up to a whole new lease of life in the digital age.