Taste the future of digital music experiences: 5 examples

I’m a strong proponent of radical innovation in the music industry. My impression is that the people with power want to sustain the status quo, while it’s getting harder and harder for the artists, who just want to focus on making great music, to make ends meet. The disruptive emergence of digital means people expect to access all music, anywhere, at anytime, and the artist has been downgraded to supplying a commodity where the relationship between an artist and a fan is almost non-existent.

Digital has led to fierce competition, commoditisation and lowering margins (except for the very, very popular acts). But I’m not sentimental, the answer is not conservatism or fighting for the old ways. The reality is that the music industry is going to shrink quite a significant amount if they do not look more ahead and innovate more radically. If you’d ask them, they’d say they are adapting and innovating, but it’s way too little, too slow. Both the structure of the industry, business models and product strategy need to change, and they should start with fundamentally putting consumers’ needs at the centre of focus, not business’ needs.

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Digital finally overtakes physical in US music market

It’s a moment that many industry observers have predicted for the best part of a decade: the US music market is now more digital than physical, by volume at least. Yet commoditisation increasingly demands entirely new strategies in order to monetise digital music.

According to figures from Nielsen SoundScan and Billboard magazine, digital music unit sales accounted for 50.3% of all music purchases in 2011, the first time that threshold has been crossed in the world’s largest music market.

The US is more advanced in digital than most of Europe. In the UK digital albums still account for less than a quarter of the market, although downloads of individual tracks far outstrip CD singles.

One in three albums is digital in the US, while Americans bought 100m more digital tracks overall in 2011 than the prior year, up over 8%.

But in spite of the digital growth, there are signs that the decline of CDs is slowing. Total album sales were up for the first time since 2004 and physical album sales fell 5% in 2011, significantly less than the 19.5% decline reported in 2010 over the prior year.

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Indie bands employed by Toyota as brand ambassadors

Inspiring you to buy Toyota?

In the future, musicians will get a large share of their income from brands sponsoring them. This hypothesis is proving its validity.

Recently we have seen clearer signs that sales of concert tickets, digital music, vinyl and merchandise are doing an increasingly bad job in offsetting the decline in CD sales.

However, in addition to building richer digital music experiences online, what looks most promising as one potential fix is collaboration between musicians and brands.

Since 2003, when the Toyota Scion was first released, it has been backing niche bands that play grindcore and garage-rock in the hopes of drawing young customers. According to the NY Times, the company is now going to start acting like a record label, sponsoring whole campaigns including record releases, music videos and tours, for around 20 bands.

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Will Facebook start to close the supply and demand gap in digital music?

Many say they would pay for digital content, but don’t, as services as Spotify aren’t rich and compelling enough. Will Facebook’s coming music service finally start to provide the right musical experience to bridge the gap between supply and demand in the digital music market?

Facebook intends to launch its long-rumored music service in a few days with Spotify, MOG and Rdio as three of the company’s launch partners. The music and media platform will be announced at Facebook’s f8 developer conference on Sept. 22 and will allow users to listen to music from within Facebook.com.

Facebook will probably not directly host or stream any music or media. Instead, it will rely on partners to provide the content. This is in contrast to Apple, Google and Amazon’s strategy of hosting music content on their servers. Facebook’s plan is to become a platform for media content in the same way it is a platform for applications and games.

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Digital music at an impasse

I have earlier written about how the music business now seems more doomed than ever. Stagnating demand for live concerts appears to have stopped offsetting the decline in CD sales. Sale of digital music is far away from being compensation enough, as it’s growth halved last year despite increased action on behalf of governments to tackle digital piracy globally. To look at the future of digital music more in depth, I turn to the wise words of Mark Mulligan, a music analyst at Forrester Research.

Writing on the Midem blog, Mulligan points out that “Digital music is at an impasse” because “it has not achieved any of its three key objectives”, specifically:

1. to offset the impact of declining CD sales
2. to generate a format replacement cycle and
3. to compete effectively with piracy.

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– Apple Just Monetised Pirated Music

According to CEO of Tunecore, a digital music distribution service, Apple’s new free iCloud and $24.99 a year iTunes Match, “marries the two disparate ideas of consumer convenience and the monetization of pirated music, providing what could be the ‘missing links’ between consumers, artists, labels, music publishers and the emerging digital music industry,” CEO Jeff Price said on the Tunecore blog. “With its launch, the odometer on the music industry is about to reset itself (again)…And the results, I believe, will be stunning.”

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Music marketing: The growing importance of social media

Social media is proving its significance within music marketing. Especially music release strategies are increasingly dependent on social media, as demonstrated by a survey performed by Musicmetric, who tracks and analyses what is happening to music online. Via Music Week.

“What is clear is that there is a definite incentive for artists to be taking the time to accurately and quickly explore ways of finding out what really works and what doesn’t for them in building up a fanbase across social networks that has not just strong foundations, but like with any lasting relationship, an authentic rapport,” said Marie-Alicia Chang, co-founder of Musicmetric.

“Artists should take heart from the fact that it is possible to break through with persistence and the right formula, whether it be the way they are sharing content, creating content or generating buzz, we are looking at more ways than ever for artists to find and take control of the new channels that will evangelise about them best.”

“There is a knack to understanding how these things pan out however, and a lot of artists, managers and marketers are all still finding their feet. The deeper exploration of what is really having the most impact and why is something we are very excited to be working with Music Week to shed some light on.”

Established acts such as Lady GaGa have a huge headstart with almost 33m Facebook fans and around 9.6m Twitter followers to mobilise.

Following the February 11 release of Born This Way, the number of new followers to GaGa’s Twitter site rose by more than 90% to 31,114. And YouTube plays dramatically increased by 385% to 250,000, from the day before to two days after the release.

Facebook is replacing MySpace as the chief platform for musicians to share their music and interact with fans. Music marketers have an increasing number of possibilities and functionality on Facebook with apps such as BandPage which can be added to Facebook Pages. This is bad news for MySpace which is widely seen as a dying fad. MySpace has now only 34 million users, down from 93 and losing 10 million only between January and February this year.