New Webinar on What Comes After Lockdown

Want to know what happens in the post-Lockdown era? Join us for our free-to-attend Recovery Economics webinar tomorrow (Wednesday 10^th June) at 4pm BST / 11am EST / 8am PT for insight on music, radio, games, TV, sports and media.

We will be presenting an overview of MIDiA’s latest research thesis: Recovery Economics. This is our framework for identifying which changed need states that emerged during lockdown will form the basis for new behaviours post-lockdown and what you need to do in order to adapt to this new normal.

What is clear is that simply doing more of the same is not a strategy. The Covid-19 lockdown created severe dislocation across many entertainment sectors but also a host of new growth opportunities. As we emerge from lockdown and enter the early stages of a global economic recession, some of these ‘new-normal’ business models will grow further, presenting increased competition for the ‘old normal’. New and established players alike will have to play by different rules in this coming period, dealing with challenges such as permanent changes to lifestyles, weakening consumer spending and ever growing competition for attention.

In the webinar we will explain how this will look across the music, TV, film, games, radio, sports and media industries.

Register now!

Travis Scott has Only Scratched the Surface of Music Games Tie Ups

In February 2019 Marshmello caused ripples of almost tidal proportions across the music business when 10.7 million Fortnite fans watched him perform a ‘concert’ in the game. Then in April 2020 Travis Scott followed in his shoes with his own Fortnite concert, pulling in 12 million players. Given that this was in the COVID-19 lockdown the 1.3 million increase was a relatively modest increase. However, Fortnite publisher Epic Games had learned its lessons from the Marshmello event and rather than limit audience demand to one event, turned it into a residency with a further 15 million players watching over four subsequent replays of the event. This took the total to 27 million, though there will be a substantial number that attended multiple performances.

What is clear is that a format has been established and that Epic Games is honing its promoter skillset. Fortnite events are labour intensive efforts to put on and currently do not scale well (hence only two events in 14 months). But there is a much bigger opportunity here for artists and one that gains new significance in the lockdown era.

The impact of COVID-19 recurring

With the cessation of live music in lockdown, artists have seen a dramatic fall in income. Established artists can expect to earn between 50% and 70% of their total income from live—that just disappeared. However fast lockdown measures are eased, live entertainment is going to take a long time to return to normal. Indeed, it may never do so.

Virologists point to the Spanish Flu outbreak after the First World War as the relevant precedent for understanding how the COVID-19 pandemic may play out. That was a far deadlier outbreak, infecting a third of the world’s population and killing up to 50 million. But crucially, it was not a single event. It had four major outbreaks over two years. It is likely that COVID-19 will not simply go away but instead will return, either in waves or as a continual background oscillation of infection.

As of May 1^st 2020 less than half a percent of the world’s population has been infected with COVID-19. Even allowing for that being just a tenth of the actual cases, that means that 95% of the population has not had COVID-19. Consequently, the majority of consumers are going to be concerned about returning to potentially infectious environments.

The combination of easing lockdown measures and weak consumer confidence means that live is not going to return to normal anytime soon. Social distancing measures will likely see rows of empty seats in larger venues and smaller, standing-only venues may struggle to operate at all. Reduced, spaced-out crowds will both harm the live experience and prevent many live events from being commercially viable to operate. Consumer concern may even make it hard for reduced capacities to be met. So, artists are not going to be able to reasonably expect a strong return of traditional live income in the mid-term future.

Lockdown lag

Live’s lockdown lag may have the knock-on effect of making artists take a more critical view of their streaming income. When live dominated their income mix, streaming’s context was a meaningful revenue stream that built audiences to drive other forms of income. It was effectively marketing artists got paid for. Now that artists are becoming more dependent on streaming income, the old concerns about whether they are getting paid enough will likely come back to the fore. It is in the interests of both labels and streaming services, that labels use this as an opportunity to revisit their streaming splits with artists. Labels cannot afford to have artists united against the labels’ primary income stream.

Live streaming is not yet ready for prime time

Live streaming of concerts is gaining traction but lockdown came a little too early for the sector. It is under developed, under monetised, under licensed, under professionalised and lacks the discovery layer crucial to make it ready for prime time (perhaps an opportunity for streaming services). On top of this, it does not create the same scarcity of experience that live music does and the rise of virtual festivals with artists playing just a few songs makes live more like a playlist experience, which favours the platforms over the artists. Enter stage left games.

Travis Scott fans are 2.3 times more likely to play Fortnite than overall consumers, but there are 80 other artist fanbases that are more likely to play Fornite than Scott’s. How do we know this?

Every quarter MIDiA fields a music brand tracker that – among many other things – tracks which games artists’ fans play. Looking across the 10 artist fanbases most likely to play three of the top games reveals a huge amount of untapped opportunity. The old model for games and music was sync. That is still a major opportunity but in the lockdown era the potential scope is so much wider.

Not every game is well suited to hosting virtual, gameplay concerts, but the console ecosystems can support so much more. Imagine if Flohio, Ben Howard, Koffee or Slowthai were to do put on exclusive performances live streamed to FIFA players via Xbox Live followed by a gaming session to which players would pay for a premium ticket to play against their favourite artists in an eSports type set up. Tickets would be limited, to create scarcity.

Lockdown economics

The lockdown lag will create a whole new set of economics across all industries. For music it will be about exploring new income streams to recast a new music business. Games will play a major part. No longer simply a place to sync music, games will become platforms for driving artist-fan engagement.

In the Attention Economy everything is connected. In lockdown economics those connections become productised and monetised, with benefits for all. Think of this like the K-Pop and Japanese Idol models, with superfans paying for extra access to their favourite artists. Instead of handshakes and meets and greets, we have gaming sessions and exclusive concerts. Artists benefit by connecting with fans and driving income; labels get to be participants in new revenue streams and help offset growing artist concern about streaming pay-outs; games companies get to add new revenue sources and products.

A dystopian virtual future

A final thought to leave you with. Tim Ingham’s recent piece suggested that Epic Games’ long view might be to create virtual artists, with the thinking being that the Marshmello and Travis Scott concerts were already in practice virtual artists. What if Epic Games is using these concerts to learn the ropes so that it could create its own roster of virtual artists. It could follow the Japanese and Korean music agency model of building rosters of employee artists, that operate under a work for hire basis. Epic Games would own 100% of all rights while the artists perform under stage names and as game avatars. Epic Games could make these virtual artists part of the Fortnite game itself to help build tribalism and fandom, and it of course already has a highly effective virtual merch store.

In doing so, Epic Games would create a games-centric music division that operates entirely outside of the confines of the traditional music industry. Dystopian perhaps, but also entirely feasible, which is why artists and labels should probably think less about becoming integrated into the games themselves and focus more on connecting their real selves with their gaming fans.

If you are a MIDiA client we will be publishing a report on this topic shortly with thousands of data points. If you are not yet a MIDiA client and would like to learn how to get access to this data email Stephen@midiaresearch.com

Lockdown Listening and the Independent Artist

After an initial lockdown lull, streaming levels are – on the surface – beginning to normalise. Underlying the macro-level normalisation, ‘lockdown listening’ is in fact resulting in dramatic shifts in listening behaviour, from using the commute time for activities other than listening to music, through using smart devices to listen at home to spending more time on YouTube. (MIDiA clients can access our latest data on these trends in our latest report ‘COVID-19: Lockdown Listening’).

Some of these shifts will have long-term effect while some will last little longer than the lockdown, but now that many artists are losing between 50%-70% of their income with the cessation of live, no artist can afford not to jump on the unique opportunities lockdown listening is throwing up, however fleeting they may be. Moreover with recording studios closed, projects getting put on hold, releases pushed back, not enough music is getting to market when it is needed most. This disruption to music’s supply chain is not going away until lockdown is and independent artists are beginning to look like they could be best placed to respond.

A COVID bounce for independent artists

In 2019 artists direct (i.e. those without record labels) was the fastest growing segment of the total recorded music market, growing by 32.1% in 2019 to reach $873 million, representing 4.1% of the total market, up from just 1.7% in 2015. Momentum was already with independent artists before lockdown, now there is a growing body of evidence that they are prospering in the lockdown listening era too. In Sweden – streaming’s bellwether – indie distribution platform Amuse saw one of its independent artists get 19 of the Top 50 tracks on Spotify’s daily chart in Sweden on March 11^th and overall DIY user uploads rose 300% year-on-year for the whole month. Although daily Spotify charts need treating with some caution – especially the Swedish one which seems to routinely throw up disruptive outliers – the underlying trend is clear: independent artists can get a seat at the top table, in fact they can get a lot of the seats. Frequently this then results in majors snapping up artists, such as Lil Nas X and Arizona Nervas.

Release schedule disruption

What is unique about lockdown listening is that we are going to start to see gaps in release schedules. The longer that studio and mastering facilities remain closed, the wider the release schedule gaps will become. Right now, labels still have schedules filled with music that was written, recorded and mastered prior to lockdown. As more lockdown time passes, the more that stockpile will be eaten into. Big label artists have big label sounds. They are teamed up with top-tier writers, session musicians, producers and production facilities. This pre-lockdown advantage becomes a hindrance during lockdown. In contrast, independent artists that are accustomed to doing some or all of their recording and production themselves, lockdown listening is an opportunity to get ahead by releasing music more frequently and consistently than big label artists can. Independent artists platform CD Baby noted it had seen a 30%-50% increase in the amount of music being released since mid-March.

Live streaming to connect with fans

Lockdown may have seemed to have thrown the dynamics of artist careers upside down but in many ways, it is in fact compelling artists to get back to basics of the most important thing: the relationship with their fans. One of the growing failings of the streaming environment has been the demise of places where artists and fans can truly connect. Facebook became a place for labels and managers to sell stuff, Instagram a place for filter-perfect artificiality and streaming just a place for listening. Although there are platforms that nobly break these new rules – Bandcamp especially, fans increasingly relied on live as the place to connect. The immediate cessation of live has seen a surge of live streaming as artists look to maintain that connection. Bandsintown data shows that the number of live streamed shows continues to accelerate, up from less than 400 per day in late-March to more than 2,000 a day by mid-April.

A new artist-fan relationship

With so many live streams and no ‘programming guide’ or meta-schedule, artists have had to double down on social media activity to keep their fans informed. They have also realised – superstar missteps aside – that during these times, fans value seeing their favourite artists without the production values, without the Instagram filters, as people just like them getting through this. This taps into the psychological phenomenon where our brains respond in a particular way when we see someone that we are used to seeing in professional media contexts suddenly looking like someone just like us.

There is a real opportunity here for artists big and small to take these newly redefined relationships into the post-lockdown world. There is a dilemma though: if they don’t, they may face fan backlash, but if they do, they will have to rebuild a new artist persona that trades less on the enigma of star quality than their human qualities. This would mean an entire rewriting of the nature of fame and fandom.

Throughout the history of recorded music, artists have been one step removed, with air of mystique and otherness. The last decade has seen this softened but lockdown may be catalysing a far more dramatic shift. If it does, what we may see may actually be a normalization of fan relationships. Newer, independent artists usually depend on a deeper, loser connection with their fanbases, so many of them already arrived at this point before lockdown. Lockdown is pushing the independent artist rulebook for fan engagement mainstream.

The COVID Bounce: Part II

In their early stages, COVID-19 self-isolation measures have quickly created new consumer behaviour patterns, oriented around four key axes:

1. Communication
2. Entertainment
3. Information/news
4. Education (for children at home)

The demand for the first two of these behaviour groups is clearly illustrated by the mobile apps that consumers are downloading. Across the Apple App Store and Google Play Store, the top 10 most downloaded free apps are dominated by video communication apps and games. These types of companies have been some of the biggest winners in the early stages of COVID-19.

Meeting the demand for human connection

The top two apps are ones that have been around for a long time but have found their moment in the current crisis. Following years establishing itself as a tool for business, Zoom has become the go-to for work-from-home staff, consumers and a host of people and small businesses looking to continue classes with students such as music classes, fitness and yoga. Zoom has managed to achieve that most elusive of consumer market forces: to become synonymous with an entire product category, much like Spotify has for music, Netflix for video, Google for search and Amazon for e-commerce.

Multiple other video communication apps such as Google’s Hangouts have also grown strongly, but the biggest business-focused winner after Zoom is Microsoft Teams. Over the last half a decade, Microsoft – the original tech major – has been rebuilding its business, establishing itself once again as a global power player. With its strong focus on enterprise and utility capabilities, Microsoft could be better positioned than the consumer-facing tech majors (Alphabet, Amazon, Apple, Facebook) to weather the likely COVID-19-driven recession. Apple’s Facetime has also experienced strong usage during the COVID-19 dislocation, but because it is a native iOS app does not appear in the app store charts.

Houseparty has grown fast… perhaps too fast

Houseparty has achieved a similar role for the pure-consumer side of the equation. After years of modest success – it was launched in 2016 – it has rocketed up the app store charts, with its highly social, fun focus giving it particularly strong reach among younger age groups. The early signs though are that Houseparty’s owner Epic Games may not have been fully prepared for the surge in usage. While its original Gen Z and Millennial target user groups may have been tolerant of the wide social reach Houseparty delivers, there are widespread accounts in the media of older consumers reacting badly to features such as people unexpectedly joining parties who they are not close to but were automatically added when they synced their contacts to the app. Also, as with any rapid growth comes the risk of scams, as illustrated by frustrated users complaining that their payment details have been hacked via the app. Although Epic Games claims it has been the victim of a smear campaign these are all the sort of unintended consequences of rapidly growing into new user segments. Houseparty is running to keep up and risks a consumer backlash if it cannot respond quickly and robustly enough. Epic Games of course knows all about global scale success so should be able to bring the expertise to bear.

Filling the down time

The other big app gainers are games, with four placings in the top 10. While games as a wider sector has been a key beneficiary of the COVID-19 dislocation, mobile games tend to skew more towards casual gamers. Popular mobile games are often easy to play, giving them wider appeal. The four games in the top 10 – Save the Girl!, Perfect Cream, House Restoration and Park Master – are clear illustrations of bored consumers looking to fill the extra time they have on their hands. Mobile games were early winners in the attention economy but lost market share as other forms of media grew in competition. Now, with an average of 15% of new attention time being available for employed consumers – due to no commuting or going out for leisure – mobile games is enjoying a similar dynamic as in the early days of the app economy. With disruptions to TV, film and music production, this boom will likely extend – albeit at lower rates – beyond the social-distancing phase, until other media categories can produce enough new content to win back more consumption time.

Post-COVID new world order

When the COVID-19 dislocation finally ends, consumers and businesses alike will return to a state of greater equilibrium. The transition will be steady rather than instant, and newly-established behaviours will take time to change. However, the point from which they will change will be different from today as consumers and businesses are still only beginning to establish new forms of normality in these abnormal circumstances. However, what is clear is that consumers and businesses will take with them into the post-COVID world new perspectives on life and behaviour.

Video messaging was already on a strong upward curve but COVID-19 has accelerated that by rapidly expanding its business use and pushing it to older, more mainstream audiences more quickly than it would otherwise have done. When the COVID-19 dislocation subsides, video messaging is one of the activities that will have a higher usage watermark than before the crisis.

The COVID Bounce: How COVID-19 is Reshaping Entertainment Demand

The economic disruption and social dislocation caused by the COVID-19 pandemic is not evenly distributed. Some business face catastrophe, while others thrive. Across the entertainment industries the same is true, ranging from a temporary collapse of the live business through to a surge in gaming activity. As we explain in our free-to-download COVID-19 Impact report, the extra time people have as a result of self-isolation has boosted some forms of entertainment more than others – with games, video and news the biggest winners so far.

To further illustrate these trends, MIDiA compiled selected Google search term data across the main entertainment categories. The chart below maps the change in popularity of these search terms between the start of January 2020 up to March 27^th. Google Trends data does not show the absolute number of searches but instead an index of popularity. These are the key findings:

• Video streaming: All leading video subscription services saw a strong COVID-19-driven spike, especially Disney+ which managed to coincide its UK launch with the first day of national home schooling.
• Music streaming: Little more than a modest uptick for the leading music services, following a long steady fall – reflecting a mature market sector unlike video, which has been catalysed by major new service launches.
• Video demand: With the mid- to long-term prospect of a lot more time on their hands, consumers have been strongly increasing searches for TV shows, movies and games to watch and play. The fact that ‘shows for kids to watch’ is following a later but steeper curve reflects the growing realisation by locked-down families that they have to stop the kids going stir crazy while they try to work from home.
• Music demand: Demand for music has been much more mixed, including a pronounced downturn in streams in Italy. Part of the reason is that music is something people can already do at any time in any place. So, the initial instinct of consumers was to fill their newfound time with entertainment they couldn’t otherwise do at work/school. As the abnormal normalises music streaming will pick up, as the recent increase in searches for music and playlist terms suggests. Podcasts, however, look like they will take longer to get a COVID bounce.
• Games: Games activity and revenues have already benefited strongly from the new behaviour patterns, as illustrated by the fast and strong increase in search terms. However, the recent slowdown in search growth suggests that the increase in gaming demand may slow.
• News: The increased searches correlate strongly with the growth of the pandemic, but the clear dip at the end provides the first evidence of crisis-fatigue.
• Sports: The closure of all major sports leagues and events has left a gaping hole in TV schedules and the lives of sports fans. The sudden drop in search terms shows that sports fans have quickly filled their lives with other entertainment and have little interest in keeping up with news of sports closures.
• Leaders: Finally, Boris Johnson has seen his search popularity grow steadily with the pandemic, while Donald Trump’s has dipped.

COVID-19’s Impact on Streaming: It’s Complicated

One of the logical conclusions to draw about the impact of COVID-19 (also known as the coronavirus) is that the extra time people are spending at home will result in a boom for home entertainment. There are already strong signals that this is happening, with TV ratings up, TV news viewing up and Netflix doing so well that it has had to agree to reduce streams in Europe from HD to SD to reduce strain on the broadband networks. So, the natural assumption would be that music streaming would see a bump too. The consensus is that there isn’t a consensus (see here, here and here). The data is mixed. There are signs of uplift, and there are signs of decline.

What is going on? The answer lies in how you view the trends. This is not a dynamic that can be understood properly by observing macro trends; instead it requires micro-trend analysis. It turns out that COVID-19 is creating different entertainment responses not just across different countries, but among different segments of consumers within countries.

Cultural impact

The first factor to consider is the work and entertainment culture of a country. Take the example of Italy, which has seen a fall in streams. Italy is a very formal work culture, which means that listening to music in many workplaces is a big no-no. The commute was therefore the one part of the workday that workers got to stream. The commute has, of course, disappeared with COVID-19. You might think that freed from the constraints of a strict workplace, work-from-home (WFH) workers would listen to music during the day. Some might – but there are other factors at play:

• Streaming is still relatively nascent in Italy, so behavior patterns are not well established. It is just not as natural for people to stream at home as it is in markets where people have been streaming for longer. Many still have home stereos they use at home.
• Italy has a big linear TV culture, so WFH workers are more likely to have the TV on in the background than in many other countries.
• People want to keep in touch with the latest news developments so are likely to have radio or TV news on in the background.

All these factors interplay and affect different people differently, but the combined effect in Italy is to have caused a streaming dip. Once crisis-fatigue kicks in people will consume news less and, if the outbreak persists long enough, TV broadcasters will start stuffing the schedules with re-runs because the supply of new shows will dry up due to the disruptions to filming and production. Italy may be down now, but it will pick up – though maybe not fully until everyone is commuting to work again.

Passion points

In other, more established streaming markets, labels we have been speaking to have seen an uplift in streams. Even in these markets, however, the macro picture obscures a much more complex micro picture. The key factor at play is passion points. We all have things that we love doing and, given more time in the day, we will fill it doing those things. If you are a music subscriber who is also a gaming aficionado then you are more likely to spend your newfound commute time on your console or gaming PC. This could actually mean a reduction in streaming if you were already listening to music in the workplace.

If the COVID-19 pandemic persists for months, then the other challenge labels will face is gaps in their frontline release schedules due to studios being closed down. It may well pay to shift some of the frontline marketing budget into catalogue marketing – not just for the classic gems, but also to boost still-popular two-to-five year old tracks that may technically be catalogue by industry definitions, but to consumers are just tracks they still like. Meanwhile, if COVID-19 causes long-term economic dislocation, streaming services will start having to fight churn rates as consumers trim their spending. Some bold thinking will need to be done around retention tactics, such as a three-month payment holiday for subscribers that try to cancel. Whether labels would be willing to fund such promotions is another issue entirely, but the key question is how much are those billing relationships worth?

The MIDiA team has been busy working on recession impact research for six months now, so we already have a library of data and reports to help our clients plan their way through these unprecedented times. In addition, during this period we will be creating regular COVID-19 reports. We will be publishing a major 5,000 word report on COVID-19’s impact on all media industries to our clients later today. In addition, we want to support the wider business and creative communities in their efforts to get through what is an unnerving and uncertain time in so many ways. Hence, we will also be creating a free-to-access version of the report to be released this coming Monday. Watch this space for more details on how to get it.

Stay well and healthy.

How Coronavirus Will Affect the Entertainment Industries

The coronavirus is a global pandemic. Regardless of what its actual infection and mortality rates might be, it is already having seismic impacts on stock markets and consumer behaviour – the result of which might be to tip the global economy into recession. It is also creating the largest home working experiment in history. Even if coronavirus doesn’t tip us into recession, the next few months will see major disruption of consumer behaviour patterns with major implications for the entertainment industries. However, to introduce an element of calm into the hysteria, coronavirus appears to be following the s-curve (scroll down to chart). So although the data we are currently looking at is two weeks out of date (ie factoring in the incubation period) the early signs are that it tops out as a small minority of the population).

In Q4 2019 MIDiA fielded questions to consumers about how they would change their leisure and entertainment spending if a recession took place and they had to reduce their overall expenditure. The full findings of this exclusive research will soon be published in a MIDiA report: Recession Impact | Cocooning Will Protect Entertainment Spend (the latest in our series of Recession Impact reports). Here are a few highlights and how they relate to the current coronavirus spread.

In the last economic downturn, consumers cocooned, opting to stay in more in order to save money. The signs are that this pattern will be replicated if another recession comes, particularly so because of public concerns about health risks in public places. When we asked consumers which three types of leisure and entertainment spend they expected to cut back on most, going out and eating out were by the far the two most widely-cited options. Live music was also widely cited among concert goers but less so than going out and eating out, with around two thirds of concert goers not planning to stop going to gigs – cancellations allowing. The difference between now and the last economic downturn is that digital content services have boomed, so consumers now have much better home entertainment options than they used to. Cocooning is therefore an even more appealing prospect. Indeed, there are probably already many people looking forward to binge watching themselves through a few virtual boxsets.

Crucially, streaming looks to be relatively well placed. Just over a fifth of consumers expect to have to cancel a video subscription and the same goes for music. However, the impact on music would be more pronounced due to the majority of music subscribers only having one music subscription. So, a consumer cancelling a music subscription means a lost subscriber. But with more than half of video subscribers having more than one video subscription, a cancelled video subscription would most often simply mean one less subscription in the market rather than a lost subscriber.

Of course, when push comes to shove, consumers may find themselves cutting back more dramatically, with streaming music particularly vulnerable because:

1. Younger people are normally the first to lose their jobs and millennials make up the lion’s share of music subscribers
2. Downgrading to a free tier still leaves the consumer with a decent music experience, and that’s without even considering the role of YouTube

Across both music and video, a long-term recession – if it happens – would see a growing role for ad-supported. YouTube looks best placed to prosper, not least because Spotify has not had the best of times growing its ad business. Pandora may also benefit, as may the likes of Peacock in video.

In short, whether it be subscriptions or ad-supported, coronavirus may actually benefit streaming business models, especially video. If a recession comes then entertainment spend will be hit, but significantly less so than leisure. These are worrying times, but at least we’ll be able to binge watch our way through them.