The Huffington Post
On the eve of the Grammy’s in LA, many of the leaders of the music business gathered to engage in “a better conversation about the future of the music business” at the third meeting of the Big Bang Forum, an invitation only event, organized by Ken Hertz, Eric Garland and myself.
Some of the key points that drove the discussion included the “two music industries,” subscription services, and the mixed blessing of social networking.
The meeting began with the observation that iPad adoption, after its first three quarters on the market, is around four times that of the iPhone and over 20 times that of the iPod in their first three quarters. Similarly, app downloads were over 10 times higher than those for songs/videos/movies on iTunes. This echoes the concept brought forth in Wired Magazine, when they boldly declared “The web is dead… Long live the internet” in August 2010 as well as Big Bang alum-speaker Michael Hirschorn’s concept of “The End of the Digital Frontier.” People are leaving (or at least spending increasingly less time) with the chaos of the computer and the web browser, and rapidly adopting its mobile replacement and singular apps.
Photo Credit: Yutaka Tsutano
Another overriding theme of the meeting was that not all the news about the music industry is bad news — there are some real success stories going on right now. One of the main problems isn’t the shifting industry, but rather that we are often measuring the progress of some of the new business models against the filter of the old. Or, more precisely, as Ian Rogers from Topspin (a company that has built software to allow artists to market directly to their fans) took pains to point out, it really should be considered two music businesses: “There are no one-size-fits-all solutions anymore.”
There’s one business for the high profile stars. This still requires access to traditional media to achieve success. But even for those that are part of that solar system, success is taking on an entirely new form. The star acts and their representatives are trying to figure out how to leverage stardom into the kind of success that artists saw when the number one album of the week routinely approached (or exceeded) 1 million copies sold. This year, the top spot has often been an album that couldn’t even crack the 50,000 mark. Success looks less and less like albums sold and more like cutting deals for sponsorships or branded lines of apparel.
Photo Credit: Natalia Castaneda
The second music business is for the artists just trying to make a living. Those below the top tier still have to struggle, but “making it” doesn’t have to be an all or nothing proposition. Emerging artists have never had a clearer path to a comfortable living thanks to the decentralized business and the new online tools that make the DIY model for artists more relevant than ever. Of course, many still aspire to achieve more. Everyone still talks promisingly about the “long tail,” but as one person put it, “We want a chunk of the torso, too!”
What’s refreshing is that there was hardly a word said about illegal file sharing, a sign that there are people in the music business who are realists. Big Bang’s focus is about solutions and opportunities, not looking back. One attendee summed up the shockingly honest view of the room by saying, “We’re in one big broken system, trying to learn new tools.”
So what is the future that these leaders embrace? Connecting with fans tops the list. Despite the disruption of the traditional business model, the online world has allowed artists and fans to come closer than ever. Rogers’ dictum: “Don’t sell anything until you have your fan connections in order.” Others agreed, saying that in the long run getting an email address from a fan is worth giving away a free download.
Possibly the most surprising trend in the room was the strongly positive view of subscription services, long derided as a novelty within the industry and uninteresting by the consumers. Subscriptions, in the opinion of most of these executives, will have a modest, but essential, role to play. One exec noted that the problem so far has been that “all the subscription systems suck. This is version 1.0.” His point could be summed up as, who will do for the subscription music system what Apple did with iPod, iPhone and iPad? In other words, who will turn subscription music service from a good idea into a great product? There was particular interest, as well as skepticism, over Spotify becoming a game changer in the U.S.
Subscriptions can be viewed through the lens of the re-bundling of the industry and in many ways the ultimate bundle: pay $10 per month and get everything. But new bundles also will be created through various direct-to-fan relationships. In fact, another point of agreement was that the music business must think of “physical goods” in a new way. Physical goods will still exist; but think endorsement deals of a line of apparel or fragrances, not CDs.
One way or another, social media will play a role. As several execs said, filtering and discovery are what’s been missing from the digital world. Improved on-demand services bundled (there’s that word again) with sharing with your friends will help shape the new environment for music consumption.
Most indicative of the evolving attitude of industry leaders as well as the tone set at Big Bang was the response to a long-time observer’s comment that “People won’t buy music anymore, but Zynga has a billion dollar industry selling imaginary cows?” What would have been yet another red flag and source of frustration even just a year ago was met with laughter and agreement. This is not a signal of the death of the industry, but proof that there is a vast market out there full of consumers willing to spend money. It is now up to the music business to figure out how to produce and sell the products that these new consumers are willing to pay for.