Apple's iCloud announcement earlier this week is the newest (and definitely biggest) "cloudy" announcement about music. This follows the launch of new platforms and services by Amazon and Google, along with other platforms that are already available; Pandora, Slacker, Rhapsody, Rdio, MP3tunes, Spotify, etc... I would add Youtube to that list, the biggest (and free-est) of those platforms..
So basically this means that we are increasingly going to listen to music by streaming it on our devices, rather than by popping a CD in a player, or by clicking a specific file in iTunes or on our iPods. This is major, because it means that you don't necessarily need to own a song now in order to listen to it whenever and wherever you want. You just need to have access to it, through your favorite provider.
So what does it mean for the artist?
People aren't buying CDs anymore, it's hard enough to convince some of them to buy our digital albums, and now they won't even have to do that.
That's right... with exceptions... but yeah, that's mostly right.
So, what now?
I often say that, in the music economy, there are three main, basic opportunities for monetization: ownership, access and enjoyment.
(I'm over-simplifying. MusicBizGuy has a good list here. But fundamentally, they are all in some way about ownership, access, or enjoyment
This the the foundation that our multi-billion music industry of the last 25 years has been built on. Simple; you heard a song on the radio (or MTV or whatever). You liked the song. You wanted to hear it again. You had to own it for that to happen. Get to the store, take $16.99 out of your pocket and buy the CD (along with 13 other songs you didn't really care for... but that's a whole other story...). Or, fire up iTunes, click, 99¢, enjoy.
In order to enjoy that music, you had to own it.
Well, now technology has made music tracks easy to store and transport (thousands of tracks in your pocket) and easy to transmit (click "play" on a Youtube video and it plays instantly, like magic, even on a phone. Magic.). New models are appearing where the music fan will now pay for access, directly, or through viewing ads, in an all-you-can-eat fashion. Anyone use Pandora already ? Or Netflix for TV and movies ? Well, there you go. The licensing and tech issues that have prevented music from getting "netflixed" earlier are disappearing fast, and we can expect music streaming to go prime time really soon.
Sadly, we can't expect the monetization of access to be significant for the vast majority of artists. See this otherwise very pretty chart. Self explanatory. As an author and/or as a performer, do not expect to ever earn significant revenue from your fans streaming your tracks on their favorite subscription service. Make sure you're registered with SoundExchange and you might see some dollars trickle in once in a while. But nothing to quit the day job, I'm afraid.
This one is interesting. I believe the smart people in music understand that the future lies into optimizing and finding ways to monetize the enjoyment of music. What do I mean by "enjoyment" ? I'm still working on that, but I generally, it means that you're not just monetizing the music (the content). It means that you are monetizing a context, in which the content is being enjoyed. The easiest example of that is live music. A concert is content (the songs that are getting performed), that is getting enjoyed by fans in a specific context (in a venue, with friends and fellow fans, on a specific night, with a drink in hand, etc.). There is scarcity attached to the fact that this context is limited, in time - tonight only! - , in seating capacity, etc., and that perceived scarcity means that some fans that care about the content and its creators will attach value to the context, and be willing to pay to get in.
I'll argue that the same enjoyment effect happens when a fan stops by the merch table, or by your online store, to buy a t-shirt or a poster. There, they are actually buying an artifact, a souvenir and a branded testimonial of the enjoyment they get from your music.
OK, so, live gigs and merch. I get it. What else ?
That's the question. And the future of the music economy lies in finding lots of good answers to that question.
I think our challenge is to create a series of new and easy monetizable contexts. This will be the topic of many blog posts to come.
A specific area of interest that we've been studying (Chris and I, with other Zooglers and with many friends and collaborators) is the fan-artist relationship. It seems to me that in the last few years we have seen a profound change in how fans and artists relate. We'll have an amazing interview up here soon with Nancy Baym, on that exact topic.
But despite the changes in how fans and artists communicate and engage with each other, when it comes to monetizing that relationship, we are still stuck in the old fan-as-a-consumer paradigm. "You're my fan? Well, good. Now please buy my music, buy my merch, buy my tickets". The good news here is that the innovation is in place, making that transaction more direct than ever, creating new packages for different levels of fans, and smart fan-funding pre-sale tools (see Kickstarter). The bad news is that by treating fans as consumers, we are limiting the artists' margins, and ignoring a potentially bigger potential.
I think we need to focus more on the fan-as-a-partner, fan-as-a-collaborator, fan-as-a-patron. Fan-as-a-friend. What does it change, as far as the music business is concerned ? How am I supposed to monetize a friend ? (first hint: you ask.).
We have plans to come up with a few tools to enable some of our ideas around this (... stay tuned for Backfed later this year) and we will definitely involve the Bandzoogle community, to test some assumptions, ask for advice and ask for feedback, etc.
But in the meantime, what we hope to demonstrate is that:
Music is more valuable than ever (but music needs contexts, where fans will value the content, and the creators).
This is perhaps the most exciting times, for both musicians and fans. The opportunity is there to define a new deal between the two, and to redefine the rules of our industry.
Artists and fans. That's it.
The rest of us (Bandzoogle included) are enablers, and we are peripheral to the main action. And we should only be compensated as such.
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