Adele is Bond and BTS is Squid Game

When Spotify announced that Adele had broken the record for the most streams in one day, with 19.8 million streams, the caveat was that this was true as long as you do not include all of the streams BTS had accumulated in 24 hours for ‘Butter’ in May. ‘Butter’ racked up 20.9 million streams, but 10 million were wiped from the record for ineligibility, thus only counting the first 10 plays per user in any given 24-hour period. While the caveat makes sense from the perspective of countering chart manipulation, it also raises fundamental questions about just how we measure success and whether, what are fundamentally subjective definitions, discriminate, intentionally or otherwise, against certain types of fans and music.

Fandom is fragmenting

We are living in the age of fragmented fandom where niche can feel mainstream, and mainstream can feel niche. Central to this is the shift from cultural moments to cultural movements. In the old, mass media world, most people experienced the same TV shows, movies and songs, with mainstream media promoting a relatively narrow selection of titles to the majority of the population. Now, audiences are fragmented and marketing is more targeted. So, it is possible for something to feel entirely mainstream to the target audience, even though it may not even register for the majority of the population. Whereas big, old-school releases resulted in water cooler, cultural moments. Successful niches become cultural movements, driving sustained engagement and cultural capital among their respective audiences. 

Bond vs Squid Game

Nowhere is this seen better than in the successes of Squid Game and James Bond’s No Time to Die*. Bondwas the cultural moment, with wall-to-wall mainstream media support and is close to crossing $500 million in box office receipts. Squid game is Netflix’s most successful show to date with 132 million viewers, but was only watched by a minority of the total population in most countries. Nonetheless, it has become a cultural movement, seeping across popular culture via memes, social posts, fan content and so forth. Bond’s box office receipts translate into about 25-35 million viewers, while Squid Game is estimated to be worth around $900 million to Netflix. Bond was the global cultural moment, but was actually smaller on all counts than the less ‘traditional’ mainstream Squid Game.

A similar dynamic is at play when comparing BTS’ Butter with Adele’s Easy on Me. Easy on Me was the cultural moment, with the massive initial wave of listening soon dropping off, while Butter was a cultural movement, which sustained throughout the first 6 days of release at pretty much the same level. Adele was Bond, while BTS was Squid Game – perhaps no coincidence that their nationalities match too. 

Adele was still the bigger success, but only if measured by the way the music industry wants it to be measured, i.e., discounting all those extra BTS Army plays. But what if a 13-year-old BTS fan simply wants to listen to the track 20 times in a day because they love it so much, while an older Adele fan listens to her tune a couple of times in the evening after work? The way we measure success inherently suggests the former behaviour is invalid, while the latter is more valid. The system favours casual listening over super-engaged listening. Listen, I am fully aware that the BTS Army is renowned for caning BTS tracks 24-hours a day in their thousands. But the risk is that the baby is getting thrown out with the bathwater.

Converting success metrics

So, why does this all matter to music? Quite simply because, just as in the TV and film industry, traditional metrics are still used to measure success – even if the old units of measurement have progressively less relevance. Music charts especially so. Since the advent of music downloads, the music industry has continually revised its definitions for ‘sales’ in order to try to make the old ‘cultural event’ measures work for a world that is increasingly shaped by cultural movements. The industry and media both like being able to talk about ‘sales’ and platinum releases – it is convenient short hand. But, if a platinum certification from 2021 is not equivalent to one from 1991 then does it really serve any purpose?

All of this would be a minor inconvenience if it were simply a ‘currency exchange’ issue, e.g., understanding what a million sales in 2021 was versus 2020. But it is not just that. The current measurement frameworks are biased towards artists that fit better in the traditional artist model than the new, emerging one. Including all BTS Army plays is probably as wrong an answer as discounting half of them. But a solution does need to be found, one that better captures the impact of a song on its fans. Perhaps a blend of measures that incorporate number of listeners, number of listens per listener, and total number of listens. (Also, there is a strong case for treating lean-back plays differently than lean-in plays – both in terms of charts and royalties). Each measure would be useful in its own right, which implies there may not be a single measure anymore. But, given the fragmentation of fandom and the growing diversity of fan behaviour, that is probably not a bad thing. The days of trying to measure every artist and every release by the same metrics will eventually become a thing of the past, however inconvenient that may be.

*Why did James Bond go grey? No time to dye…

Why Niche Is The Next Streaming Frontier

If 2014 was the year of fear, uncertainty and doubt for streaming then 2015 is shaping up to be the year in which streaming starts to deliver.  In fact so far streaming has helped drive revenue growth in the first half of 2015 for markets as diverse as Italy, Spain and Japan as well as of course in the streaming Nordic heartlands of Sweden, Denmark and Norway.  All this despite an accompanying average decline in download revenue of 7%.  But as I have long said, there is only so far that 9.99 AYCE (All You Can Eat) subscriptions can go.  This value proposition and price point combination constrains appeal to the aficionados and the upper end of the mainstream.  Pricing will be key to unlocking new users (as Spotify’s focus on the $1 a month for 3 months promo shows). However some highly influential elements within major labels are more resistant to pricing innovation now than they were this time last year.  So don’t hold your breath for the long overdue pricing overhaul.  The other side of the 9.99 AYCE equation though is just as important, namely choice, or rather, less choice. In fact, done right, cut down, niche music offerings should be able to fix the pricing conundrum too.

Too Much Content Is No Value At All

Most people are not interested in all the music in the world and most people are not interested in spending $9.99 (or the local market equivalent) a month for music.   All the music in the world is a compelling proposition for super fans, but it is both a daunting prospect and more than is required for casual fans.  In fact the supposed benefit becomes a problem, the excess of choice begets the Tyranny Of Choice.  Indeed, just 5% of streaming catalogues is regularly frequented.  Most of the rest is irrelevant for most consumers.

Cord Nevers Are A Music Industry Problem Too

Most music fans like one or more kinds of music most.  While super fans are happy to pay for the ability to get everything, mainstreamers are not.  This is exactly the dynamic we are seeing in the video space, with consumers increasingly turning to smaller, cheaper services such as Netflix and Amazon rather than paying through the nose for an excess of cable channels.   The TV industry calls these consumers cord cutters (i.e. those that cancelled their TV subscriptions) and cord nevers (i.e. those that never paid for cable).  Now the music industry is facing its own cord never challenge: consumers who have never taken up a music subscription and have no intention of doing so.  In the past they would have spent some money on downloads, now they’re just watching more music videos YouTube.  The music industry quite simply does not have a Netflix for its cord nevers to go to instead of the full priced subscription option.

The Case For Niche Playlist Services

But give those more casual music fans a music app just built around their tastes and for a fraction of the price and the equation changes from zero sum.  Imagine genre specific playlist apps for $3 or $4 month.  A dozen curated playlists, a handful of featured albums and a couple of radio stations, all just of your favourite style of music and all streamed into a dedicated app.  Not only does this proposition deliver clear value, it also gives the industry an opportunity to open up new users that have thus far not been swayed by the broader utility play of AYCE services.

Imagine a Country app, a Classic Rock app, a Hip-Hop app, a Metal app, an EDM app, a Jazz app…. Each of these would create clear appeal within the mainstream elements of genre fan bases.  And while there is some risk of cannibalizing $9.99 services, this should be small if they are 100% curated (i.e. no on demand element) because they would be unlikely to appeal to aficionados and the super-mainstream.  These niche music apps could be delivered by standalone curated playlist service providers like MusicQubed, white label providers like Medianet and Omnifone, or even by AYCE services like Spotify ‘doing-a-Facebook’ by spinning out standalone apps.

The Marketplace Needs Niche Services Right Now

Niche services are not however a nice-to-have, an optional extra for the industry.  They will be crucial to unlocking the scale end of the subscription market and they will be needed sooner rather than later. Organic subscription growth (i.e. not including the temporary adrenaline shot of Spotify’s limited time price promotions) is not growing fast enough.  Apple Music looks set to add a significant amount of new users before year-end but many of those will come at the direct expense of the incumbents.  All the while YouTube is leaving everyone else for dust: the amount of net new video streams (i.e. free YouTube views) in H1 2015 was more than double that of net new audio streams.

The 9.99 AYCE model still has a lot of life in it yet, but just as the mobile phone market has far more choice than high end devices, so the subscription market desperately needs the diversity that niche services would bring.

What the Consumer Adoption Curve Tells Us About Where Pandora is Heading

The following post is an excerpt from my forthcoming book: Meltdown (which you can read more about here).  You can also read another excerpt from the book here.

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With any new technology there is a long flash-to-bang, a gap between its arrival and its transformative impact on consumer behaviour. For all that technologists may recognize the immediate paradigm-shifting potential of a new technology, consumers typically take years to understand and employ the benefits of it. This is because consumers adopt technology in phases, with distinct consumer groups adopting at different stages:

• Early Adopters: These first consumers are the most adventurous and technology savvy. Early Adopters are typically younger though not necessarily young, often male, and always wanting to be at the forefront of technology.  These consumers will willingly tolerate bugs and glitches as part of the price to pay for being ahead of the curve.  Though incredibly important, the Early Adopters are only a small share of the total population, typically in the 5% to 10% range, and as a consequence any product that appeals solely to this group will remain confined to niche reach.
• Early Followers: The Early Followers are in many ways the sternest test of whether a product or service is every going to break through to the mainstream.  These consumers are technology enthusiasts but less willing to endure bugs and glitches, instead they want technology that is exciting and new but that is also ready for prime time.  They typically take their lead from the influential voices of Early Adopters, waiting for their affirmation of a technology before adopting it themselves. Slightly more populous than Early Adopters, strong adoption by these consumers will push a product towards 20% to 25% adoption, up to, and perhaps even through, the Critical Mass Threshold.  This is the point at which a technology will either push through to the mass market or instead remain tied to the domain of the technology enthusiasts.  To date most digital music products have failed to break out of the Critical Mass Threshold, YouTube and Pandora are notable exceptions.
• Mainstream: Should a technology have truly mainstream appeal, in terms of functionality, ease of use and pricing, then the Early Followers will help drive it to the Mainstream. This is the summit of the ambition of most technologies.  This is currently where YouTube and smartphones are.  The penetration rate is typically up to about 60-65% of the total population.
• Late Adoptions: A few technologies will push even further to the Late Adopters and thus onto market saturation.  In pure percentage of population penetration terms this peaks at around 80%.  Current technologies in this bracket are mobile phones, email and Facebook.

As a technology goes through these stages the line of adoption almost always adheres to an S-Curve, with a long slow initial burn and then a sharp acceleration of growth before finally slowing down again and then finally flattening out.

This framework is useful for both understanding the historical context of music technology but also to help gauge where current technologies are heading.  When we look at the long term historical trend for Pandora’s active users we see a strong correlation with the model (see figure).  To be clear we are not talking about the total penetration rates of the entire population, but instead in the context of Pandora the model illustrates its growth within the confines of its addressable audience.

A lot of talk was made of the impact of Apple’s iTunes Radio on Pandora’s active user count, and a small dip is clearly discernable.  However when it is considered within the context of the historical growth curve we can see that Pandora’s user growth had already matured.  Though it is worth noting that listening hours among those users actually grew in October 2013 even though users dipped.

As things stand, it appears that Pandora has reached a growth ceiling.  This does not mean that it cannot accelerate beyond this but the trend indicates that something significant will need to change to make that happen.  In a longer term perspective Pandora can absolutely push further into the mainstream populous, but that growth is likely to be slower, driven by more fundamental organic trends such as overall consumer usage of digital media and the broader transition of radio consumption to digital platforms.