Free-to-Attend Event: Monetising Fandom

monetisingfandomspeakers2x2Join us on Wednesday 17thJuly in central London for MIDiA’s next free-to-attend event: Monetising Fandom in a Fragmented Content Landscape. Regular attendees of our events will know that they combine great new data and analysis with insightful panels and a mix of attendees not quite like at any other event, with representation from across multiple industries.

Next week is a big one. We will be showcasing a brand-new stream of data for MIDiA: audience fandom. With audiences fragmenting across so many different platforms, formats and content genres, the attention economy not only puts pressure on every form of content, it also necessitates a complete rethink of how we measure success. Pre-streaming, success was much easier to understand: album sales and TV ratings were nice, simple-to-measure metrics. Now though, audiences are spread across a host of different platforms, sometimes consuming, sometimes simply engaging with social or promotional content. It all contributes to the artists’ brand impact, and in the era of the attention economy, extended brand reach is more important than it has ever been.

In this event we are going to showcase our latest audience insight data on music artists and TV shows, and we will present our case for an entire new way of measuring and understanding success.

The event itself will include a keynote presentation from Mark Mulligan, followed by a panel discussion featuring representatives from TikTok, ATC, Kobalt and Spirit Media.

Follow this link to sign up (fully-refundable deposit required).

For those of you who are not in London, a live stream will be made available on our Facebook page at 18.30 BST.

Niche is the New Mainstream

Fandom is fragmenting. Streaming personalization and falling radio audiences are combining to rewrite the music marketing rulebook, ushering in a whole new marketing paradigm. Hits used to be cultural moments; artist brands built by traditional mass media. However, this fire-hydrant approach to marketing lacked both accountability and effective targeting. Now, hyper targeting, both in marketing campaigns and streaming recommendations, is creating a new type of hit and a new type of artist. Global fanbases are being built via the accumulation of local niches, while a few big hits for everyone are being replaced by many, smaller hits for individuals. Niche is the new mainstream.

The marketing rulebook is being re-written

Three trends have reshaped how music marketing works:

  1. Digital targeting: The rise of social media provided label marketing teams with masses of data and unparalleled targeting
  2. Linear decline:The steady decline of linear radio and TV audiences is eroding these platforms’ contribution to music marketing effectiveness
  3. Streaming curation:Streaming algorithms and curation teams are overriding label marketing efforts, delivering users what the streaming services want to deliver rather than what labels want to

fragmented fandom midia research - niche is the new maiostream

Artist marketing used to be about building exposure and brands across mass market analogue platforms. With radio, TV and print all in decline – especially among the crucial younger audience segments – that approach is being replaced with targeted digital campaigns which in turn are fragmenting fandom and transforming what global fanbases look like:

  • The marketing transition:Marketing of media brands is locked in a transition phase, moving from the old model of one-to-many messaging to targeted digital campaigns. As in all transitions, the old and new models will co-exist for some time. For music marketers though, there is a greater need for emphasis on digital because this is where the younger music fans are that are so crucial to the success of so many frontline acts.
  • Democratization of access:In the old model, mainstream linear media (TV and radio especially) was the power tool of big record labels. Access to these finite schedules is inherently scarce and bigger record labels have an inbuilt advantage due to their scale and influence. In on-demand environments access is democratized, with anyone able to run their own self-serve campaigns on platforms such as Facebook, Snapchat, YouTube and Google search. The result is that labels and artists of all sizes can reach their global audiences.
  • From cultural moments to cultural movements:Linear schedules have the unrivalled ability to create simultaneous audiences at scale around a specific piece of content. Creating these cultural moments remains the crucial asset that TV and radio bring. But the weakness of this approach is that much of the impact is diluted. It is carpet bombing compared to the laser-guided missile of digital marketing, resulting in a lot of wasted exposure and effort. Mass reach is progressively less useful for driving fandom. Against this, the hyper-targeting of digital creates super-engaged fanbases that can often thrive under the mainstream radar. Kobalt artists such as Lauv (2.5+ billion streams) and Rex Orange County (0.8+ billion streams) are examples of this new paradigm, creating global-scale cultural movements rather than linear cultural moments. Niches thrive in this world of fragmented fandom, but niche no longer inherently means small. Indeed, the cumulative effect of many local niches is global-scale fanbases. Niche is the new mainstream.

The old living side by side with the new

As when every new paradigm shift occurs, the old and the new will live side by side. There will still be plenty of artists that appeal to younger audiences that become household names too across mainstream media – look no further than Billie Eilish. But make no mistake, the shift is happening. More and more global artist success stories will happen outside the mainstream. These fan bases will be increasingly passionate and loyal, acting as strong platforms for building impactful artist stories. Success will be built around audiences that want a piece of everything that artist has to offer, from streaming to merch to tickets. This is how independent artists and many independent label artists have been building careers for years. They no longer have the exclusive, however.

Fragmented fandom is an asset, not a challenge

Artists that once would have been household names – mass media brands with large but often passive fanbases – are now rising as under-the-radar superstars. It has never been more important for this to happen. With streaming pushing more listeners towards tracks and away from artists and albums, building passionate clusters of fans is not just key to success, it is the very thing that success will be built on. Fandom is fragmenting but it may be the best thing that has ever happened to it.

This blog post pulls insight from a forthcoming MIDiA report Music Marketing: Niche is the New Mainstream that will be published in MIDiA’s new Marketing and Brands service. To find out more about how to get access to this research practice – a must have for anyone involved in marketing of media brands – email stephen@midiaresearch.com

Spotify, the Decline of Playlists and the Rise of Podcasts

The following is a small excerpt from MIDiA’s forthcoming third edition of its ‘landmark State of the Streaming Nation’ report. For more information about this report email stephen@midiaresearch.com

Most things that Spotify does are scrutinised and cross-examined within an inch of their lives, with vested interests trying to second guess what may be the intended or unintended consequences for them. Most actions are viewed through the disruption lens i.e. how will this hurt or compete with Spotify’s rightsholder partners? The streaming market is of course so much more than just Spotify, but the company acts as a lightning rod for the wider market and most often sets the strategic agenda.

Spotify’s Two Phases of Growth

Two of Spotify’s most significant moves have been playlist curation and podcasts. Spotify is moving into the second major phase of its existence. Phase 1 was about establishing itself as a streaming music powerhouse, Phase 2 is about what it becomes next, extending beyond the streaming music beachhead. This is the typical trajectory of tech companies, establishing themselves in their core competencies and then expanding. This can either be a dramatic expansion – e.g. Amazon moving from eCommerce into video and music – or a more focused value-chain extension – e.g. Netflix moving from simply streaming other’s shows to making its own. For Spotify, playlists were a Phase 1strategy and podcasts are very much part of Phase 2.

midia playlists and podcasts

Podcasts may just have come in the nick of time for Spotify because curated playlists remain much more about potential than they do reality. Just 15% of streaming consumers listen to curated playlists. In fact, of all the key streaming feature activities, curated playlists come lowest. Curated playlists are clearly not to streaming music what binge watching is to streaming video. Instead streaming activity is fragmented across multiple features and just 10% of streaming consumers regularly do all four of the activities listed in the chart above.

‘But wait’ I hear you ask, ‘that doesn’t make sense, look at all these streams we’re getting from playlists’. The key factor here is the difference between the number of playlist users and the number of playlist streams. Playlists over index in terms of contribution to streams. With dozens of tracks per list, lean-back playlist listening can easily generate more streams per user than lean-forward listening. Thus, we have one of the great emerging paradoxes of streaming: passive audiences can generate more streams, and thus rightsholder pay outs, than engaged, aficionados. However, a word of caution, should casual playlist listening become large enough, then the net result will be a dilution of the royalty pool and thus diminishing per stream rates.

Perhaps not the holy grail of promotion

A few years ago, playlists looked like the future of artist marketing, now they are looking a bit like a busted flush. They may be great at generating streams but are not so great at building an artist’s story. The near-obsession with Spotify playlists in label marketing strategy reflects the fact that most record label executives use Spotify and thus often have a Spotify-centric (and therefore playlist-centric) worldview. But labels are now beginning to question the artist ROI of playlists. The growing adoption among casual listeners only compounds matters and means that a playlist ‘hit’ does not necessarily do much to help long-term artist brand building. To put it simply: a playlist is not a shortcut to cultural relevance.

Podcasts could be bigger than streaming

Enter stage left podcasts. With its acquisitions of Gimlet, Anchor and Parcast, Spotify is betting big on podcasts. Already, more streaming users (18%) listen to podcasts than curated playlists while overall consumer podcast penetration is 11%. In Sweden – the early adopter market that gives us a view of where other markets are heading – podcast penetration is 19%, rising to 28% among streamers. Podcasts are a Netflix moment for radio and may even have the potential to be bigger than streaming music (US radio ad revenues alone are $16 billion). Right now, the growth in overall podcast audiences is fairly slow, but engagement is accelerating as are content creation, monetisation and distribution. It is not entirely inconceivable to think that five years from now, podcasts could be a bigger business for Spotify than music. Certainly, creators could be making much more money, even now.

While it remains more likely that music will be the core of Spotify’s business half a decade from now, all the early indications are that Phase 2 will mean a degree of diversification of user experience, business model and revenue stream, with podcasts at the vanguard. Playlists are not dead, but nor are they the golden child anymore.

Soundcloud Edges Towards Making YouTube The Odd One Out

Soundcloud took another step away from being an ‘under licensed’ service to a ‘fully licensed’ one with its deal today with indie licensing body Merlin. This follows on the footsteps of deals with Warner and the National Music Publishers Association. Soundcloud is a long way yet from being out of the licensing woods but momentum is clearly building. Most importantly though, Soundcloud is inadvertently playing the role of ice breaker in the new wave of deals for sites that traded as promotional sites in the download era and are having to, willingly or not, accept a new role that looks and feels a lot more like a straight forward streaming service.

Merlin’s CEO Charles Caldas nailed it in this quote from an interview with Music Ally:

As the value of the streaming market grows, people are starting to realise that consumption is the new sales. Anywhere that people are listening to music is actually the end-game now. This notion that everything is promotional: that way that people used to talk about YouTube as a ‘promotional channel’. When that becomes the destination for music fans, it needs to compete in the marketplace with all the platforms that are monetised,” said Caldas.

Soundcloud always had a lot of goodwill within the indie community and indeed even within the marketing and A&R departments of majors because of its roots as a platform for helping labels, artists (and more recently) fans interact more effectively. The labels’ commercial affairs teams however have been far less enamoured, instead asking why Soundcloud should be able let people listen for free, on demand, without licenses when others can’t.

The role of standalone promotional streaming services made sense when everyone was still buying music, but with download sales and CD sales both on the slide globally the model is less obvious. The discovery journey has also become the consumption journey but the change is happening so fast that it is easy to confuse the two. This is why we have the paradoxical situation where 10 million streams on Spotify is considered to be x amount of lost sales while 10 million YouTube views is considered a marketing success. Right now a large chunk of digital marketing activity that is driving streams on YouTube and Soundcloud is tactic without purpose. It is marketing for marketing’s sake without a clear enough sense of what the end goal is.

This is why Soundcloud needs to get these deals in place. It will completely transform the commercial dynamics of Soundcloud, and there will undoubtedly be disgruntled artists and fans, but the music world has changed and it needed to also. All of which leaves YouTube the odd one out without a chair to sit on when the music stops.

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An honourable mention goes to Songkick who today announced a merger with Crowdsurge and a combined raise of $16m. Congrats to Songkick and Crowdsurge co-CEO Ian Hogarth who is one of the smartest minds in the music industry.