Judging by the fact that the last decade in the music industry was characterized by tumult and revolution in every sector, the year ahead will be no different — and we already have plenty of clues as to where and how that will play out. As tech companies, record labels, artists, songwriters, and the industry’s other players brace themselves for highly anticipated government decisions on copyright infringement and radio royalties, they’re also holding a number of other slow-burning matters in the backs of their heads.
The frenzy for data will be lucrative — for some
If there’s been one favorite industry buzzword of late, it’s “data” — in all its broad, often-wrongly-employed glory. Last year, music-streaming services like Spotify, Pandora, and Apple took their artist-facing data analytics platforms up a notch, boasting about how such platforms can offer an unprecedented degree of understanding about one’s own audience. But they are not the only ones in the space; a number of third-party data companies offer viable alternatives for artists to glean insights into touring, marketing, and demographic data.
Raw data, on its own, offers very little for most people — which is why these platforms that can cut the data the right way have so much intrinsic worth (and also why many record labels are quickly shoring up on data scientists and programmers to bolster their traditional sales and A&R teams). Right now, the fee for accessing these kinds of analytics can be anywhere from $0 to around $2,000 a year. That breadth of range won’t last for long. As the streaming services begin to explore revenue growth that doesn’t depend on the fickle metrics of subscriber figures and ad buys, the currently-free data offerings they provide to artists will likely be one of the first places they look. When that happens, it’ll be a question of who does the spending, and who gets to stay around to do the selling. — A.X.W
The artist-fan relationship will see drastic changes
What is a devoted music fan in 2020? Is it someone who’ll line up for days ahead of a live performance? Someone who splurges on VIP packages that include haircuts by the artist’s barber? And more importantly, how does an artist create, locate, and reward that fan?
While large concert companies are busy exploring the answers to those questions with new tech developments such as loyalty-based discounts and real-time texts, artists have barely scratched the surface. For most artists — from indie acts to the bright-burning supernovas — the main methods of communication with fans over the last decade have been social media (free, but limiting) and concerts (expensive, impersonal, similarly limiting). In the technologically sophisticated era of Web 3.0, that’s due for an overhaul, and soon. Some musicians are newly toying with startups that allow direct artist-to-fan messaging; others are planning fundraisers on Kickstarter, sending subscriber-only newsletters on Patreon, and raising engagement (and modest sums of money) via other means. What’s next? Streaming’s buffet-style business model has torn down the barriers between fans and music; the innovation that finally brings fans and musicians together will be just as monumental. — A.X.W
Streaming will have to face the (fake) music
Just two weeks into the year, the music industry already has its hands full with a curious new scandal: Music fans across the internet are reporting that someone is hacking their accounts and looping French Montana songs. French himself blames 50 Cent — who the rapper says is buying the fake streams and framing him — but the real source has not been confirmed. Though it concerns an entirely different kind of streaming fraud, the situation brings forth déjà vu to January 2019 when music fans found unreleased SZA and Beyoncé tracks uploaded under artist accounts named “Sister Solana” and “Queen Carter.” And the odd Montana dispute also bears similarity to a brewing controversy in country music right now, in which hundreds of artists are seeing their music re-uploaded under fake accounts not in their control.
What is the extent of streaming’s fake music problem? It’s increasingly clear that music-streaming services aren’t vulnerable only to one kind of fraud, but a cornucopia of ways that malicious actors can game the platforms for revenue, exposure, or just simple attention. While major players in music signed a lip-service group pledge last summer to combat fake streams, they’ll have to confront the matter in earnest if this level of publicized malfeasance continues. — A.X.W
The major labels will cash in on outside interest
On December 31, a consortium led by Tencent Holdings Ltd — one of China’s biggest tech/media conglomerates, with a $480 billion market cap — announced that it had signed a shareholders’ agreement to acquire 10% of VIvendi’s Universal Music Group — the world’s largest music rights-holder. The $3 billion deal values Universal at $33.4 billion, some 30X the EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) profit figure UMG recorded in 2018. Universal’s biggest rivals, Sony Music Group and Warner Music Group, will now presumably be able to attract comparative multiples in the M&A market, should their owners wish to “release some value.”
Check this for a stat that speaks of music’s escalating worth: WMG was wholly acquired by Len Blavatnik for $3.3 billion in 2011 — a smaller number than that Tencent just agreed to pay for a mere 10% of Universal. WMG judges its annual financial performance in terms of OIBDA (Operating Income Before Depreciation and Amortization), a similar measure to EBITDA. In WMG’s 2019 fiscal year, its OIBDA came out at $625 million. With a 30X multiple applied, this would result in a valuation of $18.8 billion. If Len Blavatnik could command this price for Warner in 2020, it would mean he would need to sell just 18% of his music company to a minority bidder in order to recoup the initial investment he made in 2011.
Who might such a hypothetical minority bidder be? Don’t count out Tencent, which already owns stakes elsewhere in music (including in Spotify and India’s Gaana). And in the gaming world, Tencent bought a 40% holding in Epic Games, owner of Fortnite, for a reported $330 million in 2012; this, despite also owning a 93% state in League Of Legends developer Riot Games. Already in 2020, Tencent has acquired a position in another games developer, Japan’s Platinum Games (maker of the Bayonetta series) for an undisclosed fee. — T.I.
Tech will flood the concert experience
2019 was a watershed year for mixed reality in concerts, and the tech is by no means going away in 2020. Billie Eilish, Post Malone, and Tenacious D all offered virtual reality shows through Oculus Venues in 2019, and more VR shows should be underway this year. Marshmello’s unconventional Fortnite concert drew a virtual audience in the millions and was one of the gaming platform’s most popular events, becoming perhaps the most popular live concert in a video game ever. Alt Metal pioneers Korn would follow up with a video game concert of their own, playing a three-song live set through the video game AdventureQuest six months later.
The now-infamous hologram shows aren’t stopping either. First hitting the mainstream with Tupac’s hologram appearance during Snoop Dogg’s Coachella set in 2012, the concept has grown out to full-fledged tours, with virtual Roy Orbison and Buddy Holly co-headlining a North American tour late last year, with another hologram tour from the late heavy Metal god Dio. That trend will continue this year with Whitney Houston’s “An Evening with Whitney” hologram tour, slated to kick off in February. — E.M.
And music-making will get easier than ever
Underneath the glittering innovations in music’s distribution and consumption side in the last decade were a series of quieter, but no less revolutionary, disruptions to the way that music can be created. For the first time in history, artists don’t need to spend thousands of dollars to put out a hit song — and things will only continue to get faster, cheaper, and simpler. Joining ubiquitous tools like Apple’s Garageband are, these days, a number of beat-making templates like Splice and Beatstars — for a testament to their value, just consider that Lil Nas X made his money-printing hit “Old Town Road” using a beat he bought on the latter website for $30 — and the exponential pace of upheaval in music production will usher in a new era of creativity.
On the hardware side, new products like Expressive E’s Osmose, a wallop of an electronic instrument that can deliver acoustic and synthetic sounds at the lightest touch of a finger, are also stripping away traditional barriers and challenging musicians to stretch limits.
What will this mean for music fans? Already, Spotify says it receives 40,000 new songs a day; there’s no telling what that number will be by the end of 2020. — A.X.W.
Source: AMY X. WANG & ETHAN MILLMAN & TIM INGHAM