Music Streaming Comes Of Age

Last Saturday was the 10th International Record Store Day, an annual event to celebrate independent music shops. A key feature is the list of exclusive and limited edition vinyl releases, most of which can only be bought in selected participating stores – in person and on the day. But there are also loads of other promotions and live events, designed to get people browsing the racks in their local retail outlet. In an age when streaming services now account for the bulk of US music industry revenues, what is the future of the neighbourhood record shop (those that are still left, that is)? Will streaming services kill off digital downloads, as well as sales of physical product like CDs and records?

Despite the sense of doom that has permeated the record industry in recent years (if not decades!), there is also a feeling that, just as the internet has not yet managed to kill off the publishing industry, digital has not yet killed the radio star. The independent music industry in particular has found a way to survive, and retail stores are still an important part of the business.

So, what are the recent trends in music industry sales and business models?

First, the continued rebound in vinyl sales (at least in the UK) show that there is renewed interest in this 70-year-old format, with industry data showing a 25-year high (but not yet a return to the 1980s’ peak). Record Store Day is generally credited with boosting vinyl sales. And to be fair, even music streaming services have contributed to this growth, through curated content, recommendation engines and user preferences: meaning that listeners get exposed to a wider range of music and artists than they would from traditional Top 40 radio, and they get to explore and discover new music.

Second, digital downloads, once seen as the industry growth engine, are facing a pincer attack, from streaming services as well as vinyl sales. No wonder that Apple is expected to slowly and quietly retire the iTunes download store, and shift more focus onto its own Apple Music subscription service. The music industry (especially the dwindling number of major labels) didn’t really “get” the internet. Having just competed in the CD-format wars, the major labels then competed on digital file formats, and tried to lock their digital content to proprietary players and software protocols. Some of this reticence was justified – thanks to digital piracy and illegal file sharing – but they didn’t (and still don’t) help themselves by poor CX on their retail websites (if they have an e-commerce presence at all), and adherence to arcane geo-blocking.

Third, many musicians are benefiting from increased exposure via streaming services – although with Apple Music and Spotify seemingly leaving the other platforms far behind, the downside risks from a dominant duopoly don’t need spelling out. Especially as the royalty payments from streaming are generally much smaller than they would have been from physical sales, “traditional” downloads and radio airplay. This source of friction between labels, their artists, music publishers and online content platforms surfaced again earlier this month, in a spat with YouTube over fees for video streaming.

Fourth, in a new move in the streaming wars and the battle to win mobile screen real-estate, Australian startup Unlockd has just secured a deal with MTV UK to stream free music videos in return for viewing ads. It’s also a move designed to counter ad-blockers and locked screens, while finding another way to distribute sponsored content. Elsewhere, some mobile carriers are now including music streaming services as part of customers’ un-metered data consumption, although what this may mean for artist royalties and the revenue share from ad-supported content on Spotify etc. is unclear.

Fifth, as another example of how the music industry is having to adapt, UK startup Secret Sessions is using a combination of social media, independent/unsigned artists and major brand licensing deals to find new ways to generate revenue streams for artists that can no longer count on income from traditional sales-based royalty deals, especially with the diminished licensing revenues from streaming services.

Sixth, as further evidence that all is not well in the world of music streaming, SoundCloud continues to lose its way. Once the music service of choice for user-contributed content created by independent and unsigned musicians, it got greedy and has been subject to recent speculation about its financial health and future.

Initially, SoundCloud was all about the makers and producers – helping artists connect with their audience, via a simple but effective website and mobile app. It also meant that at first, SoundCloud charged musicians and labels under a “pay to publish” model, while listeners could simply stream (and sometimes download) all this content for free. Then, it alienated many of its earliest supporters and champions, by introducing “ad-supported” streaming (with priority access going to labels and artists with big marketing budgets, who could also attract/demand the lion’s share of the advertising revenue).

SoundCloud also seriously messed with the app, making it far less useful to artists, and then introduced its own subscription-based streaming service, SoundCloud Go. Only, it wasn’t satisfied with just one subscription model, and recently announced an “upgrade” – whereby the “old” service became “SoundCloud Go+“, and a “new” SoundCloud Go was launched. Confused? You will be….

Meanwhile, Bandcamp continues to outperform the industry, in terms of annual sales growth, and has become a unique platform that offers music streaming, digital downloads and even physical product. (Frustratingly, Bandcamp is still blocked from selling digital content directly via iOS devices – even though much of this content is unavailable on either iTunes or Apple Music. Surely that’s anti-competitive?) And now there’s an amusing string of “SoundCloud vs Bandcamp” memes doing the rounds which may say a lot about the respective fortunes of these rival services.

Finally, the last word on the current state of music streaming and digital downloads should go to the artist known as L.Pierre. He has just announced the release of his latest and final (vinyl-only) album under that particular moniker, with an accompanying artist statement which could be seen as both an indictment upon and a requiem for the music industry.

NOTE: Apologies to my readers for any confusion regarding the timing and accessibility of this post. Thanks to WordPress, this article “missed” its scheduled time, and the outgoing e-mail notification had a faulty link. Normal service will hopefully be resumed next week…

Next week: Startup Vic’s E-commerce Pitch Night

What might we expect in 2017?

On a number of measures, 2016 was a watershed year. Unexpected election results, fractious geopolitics, numerous celebrity deaths, too many lacklustre blockbuster films, spectacular sporting upsets (and regular doping scandals), and sales of vinyl records are outpacing revenue from digital downloads and streaming services. What might we expect from 2017?

Detail from "The Passing Winter" by Yayoi Kusama (Photo by Rory Manchee)

Detail from “The Passing Winter” by Yayoi Kusama [Photo by Rory Manchee]

Rather than using a crystal ball to make specific predictions or forecasts, here are some of the key themes that I think will feature in 2017:

First, the nature of public discourse will come under increased scrutiny. In the era of “post-truth”, fake news and searing/scathing social commentary, the need for an objective, fact-based and balanced media will be paramount. In addition, the role of op-ed pieces to reflect our enlightened liberal traditions and the need for public forums to represent our pluralist society will be critical to maintaining a sense of fairness, openness, and just plain decency in public dialogue.

Second, a recurring topic of public conversation among economists, politicians, sociologists, HR managers, career advisors, bureaucrats, union leaders, technologists, educators and social commentators will be the future of work. From the impact of automation on jobs, to the notion of a universal basic income; from the growth of the gig economy, to finding purpose through the work we do. How we find, engage with and navigate lifelong employment is now as important as, say, choosing high school electives, making specific career choices or updating professional qualifications.

Third, the ongoing focus on digital technology will revolve around the following:

  • The Internet of Things – based on a current exhibit at London’s Design Museum, the main use cases for IoT will continue to be wearable devices (especially for personal health monitoring), agriculture, transport and household connectivity
  • Fintech – if a primary role of the internet has been for content dissemination, search and discovery, then the deployment of Blockchain solutions, the growth in crypto-currencies, the use of P2P platforms and the evolution of robo-advice are giving rise to the Internet of Money
  • Artificial Intelligence – we are seeing a broader range of AI applications, particularly around robotics, predictive analytics and sensory/environmental monitoring. The next phase of AI will learn to anticipate (and in some cases moderate) human behaviour, and provide more efficacious decision-making and support mechanisms for resource planning and management.
  • Virtual Reality/Augmented Reality – despite being increasingly visible in industries like gaming, industrial design, architecture and even tourism, it can feel like VR/AR is still looking for some dedicated use cases. One sector that is expected to benefit from these emerging technologies is education, so I would expect to see some interesting solutions for interactive learning, curriculum delivery and student assessment.

Fourth, and somewhat at odds with the above, the current enthusiasm for the maker culture is also leading to a growing interest in products that represent craft, artisan and hand-made fabrication techniques and traditions. Custom-made, bespoke, personalized and unique goods are in vogue – perhaps as a reaction to the “perfection” of digital replication and mass-production?

Fifth, with the importance of startups in driving innovation and providing sources of new economic growth, equity crowdfunding will certainly need to come of age. Thus far, this method of fund-raising has been more suited (and in many cases, is legally restricted) to physical products, entertainment assets, and creative projects. The delicate balance between retail investor protection and entrepreneurial access to funding means that this method of startup funding is constrained (by volume, amounts and investor participation), and contrary to stated intentions, can involve disproportionate set up costs and administration. But its time will come.

Finally, as shareholder activism and triple bottom line reporting become more prevalent (combined with greater regulatory and compliance obligations), I can see that corporate governance principles are increasingly placing company directors in the role of quasi-custodians of a company’s assets and quasi-trustees of stakeholder interests. It feels like boards are now expected to be the conscience of the company – something that will require directors to have greater regard to the impact of their decisions, not just whether those decisions are permitted, correct or good.

One thing I can predict for 2017, is that Content in Context will continue to comment on these topics, and explore their implications, especially as I encounter them through the projects I work on and the clients I consult to.

Next week: The FF17 Semi Finals in Melbourne

“Language is a virus” – a look at coding skills

We are fast-approaching the point when a lack of some basic coding skills will be likened to being illiterate. If you are unable to modify a web page or use an HTML text editor, it will be like not knowing how to create a Word document or edit a PDF file. Coding does appear on some school curricula, but it is primarily taught in the context of maths, computer programming or IT skills. Whereas, if we look at coding as a language capability (part of a new literacy), it should be seen as an essential communication tool in itself.

quote-William-S.-Burroughs-language-is-a-virus-from-outer-space-92713First, I am aware that a number of programs for children are trying to teach coding and maths in more relevant ways, and having talked to some of their creators, I admire their ambition to place these skills in a broader context. Coding might be described as the “4th R”: alongside reading, writing, arithmetic we have reasoning”. So a program like Creative Coding HK (as it name implies) focuses on students making things; in the USA, KidsLogic is placing as much emphasis on contextual learning as on robotics; while Australia’s Machinam is re-writing the maths curriculum to teach practical, everyday problem-solving skills.

Second, as we know, learning the foundations of coding is like learning the syntax of a foreign language. However, while Latin and Greek can provide the basis for learning the structure (and many words) of many European languages, it’s not much use when learning character-based languages (Chinese, Japanese) – although there are common grammatical elements. But if we understand that a line of any code has to be structured a certain way, contain essential elements, define key attributes and run in a particular sequence or order, we may come to “read” and interpret what the code is saying or doing.

As an aside, I’m struck by the comments made by the founder of AssignmentHero during a recent pitch night. Although he had studied computer sciences at Uni, he did not use any of the formal computing languages he had learned when building his product. This highlights the downside of learning specific languages, which can become obsolete, unless we have a better grasp of “which languages for which purposes”, or find ways to easily “interpolate” components of one language into another (just as languages themselves borrow from each other). Or do we need an Esperanto for coding?

Third, even if I don’t want or need to learn how to program a computer or configure an operating system, knowing how to define and sequence a set of instructions for running some software or a dedicated program will be essential as more devices become connected in the Internet of Things. For myself, I have dabbled with a simple bluetooth enabled robot (with the original Sphero), acquired a WiFi-enabled light bulb (the programmable LIFX) and experimented with an iOS music app that incorporates wearables (the MIDI-powered Auug motion synth).

Finally, just like a virus, coding is contagious – but in a good way. At a recent event on Code in the Cinema (hosted by General Assembly as part of the Melbourne International Film Festival), there were three demos which captured my attention, and which I will be investigating over the coming months:

I think they show why, where and how many of us “non-computing” types will want to learn the benefits of coding as a new language skill. If nothing else, getting comfortable with coding will help mitigate some of the risks of the “digital divide”.

Next week: The arts for art’s sake….

Update on the New #Conglomerates

My blog on the New Conglomerates has proven to be one of the most popular I have written. I’d been contemplating an update for a while, even before I heard this week’s announcement that Verizon is buying the bulk of Yahoo!. Talk about being prescient…. So, just over two years later, it feels very timely to return to the topic.

Image sourced from dc.wikia.com

Image sourced from dc.wikia.com

Of the so-called FANG tech stocks, when I was writing back in May 2014, Facebook had recently acquired WhatsApp and Oculus VR. However, apart from merging Beats Music into its own music service, Apple has not made any big name deals, but has made a number of strategic tech acquisitions. Meanwhile, Amazon has attempted to consolidate its investment in delivery company, Colis Privé, but got knocked back by the French competition regulators. Netflix finally launched in Australia in March 2015, and within 9 months had 2.7 million customers, a growth rate of 30% per month. Finally, Google has since renamed itself Alphabet, and purchased AI business Deep Mind.

Over the same period, Microsoft appears to have reinvigorated its strategy: back in May 2014, Microsoft had just completed its acquisition of Nokia. Since then, Microsoft has announced it is buying LinkedIn (following the latter’s purchase of Lynda.com in 2015), but has also shut down Yammer, which it had only bought in 2012. The acquisition of LinkedIn has been framed as a way to embed corporate, business and professional customers for its desktop and cloud-based productivity tools (and maybe give a boost to its hybrid tablet/laptop PCs). On the other hand, Microsoft has a terrible track record with content-based products and services, as evidenced by the Encarta fiasco, and the fact that Bing is an also-ran search engine. I think the jury is still out on what this transaction will really mean for LinkedIn’s paying customers.

So, what are the big tech themes, and where are the New Conglomerates competing with each other?

First, despite being the “next big thing”, VR/AR is still some way off being fully mainstream (although Pokémon GO may change that….). Apple and Google will continue to go head-to-head in this space.

Second, content streaming is not yet the new “rivers of gold” for publishing (and the sale of Yahoo! might confirm that there’s still gold in those advertising hills….). But music streaming (Apple, Spotify, Amazon and Google – plus niche services such as Bandcamp and Mixcloud) is gaining traction, and Amazon is building more content for SVOD (to compete with Netflix, Apple and Google). But quality public broadcasters such as BBC, ABC and NPR are making great strides into audio streaming (via native apps and platforms like TuneIn) and podcasting. One issue that remains is the fact that digital downloads and streaming still suffer from geo-blocking, and erratic pricing models.

Third, Amazon continues to build out its on-line retail empire, even launching private label groceries. Amazon will also put more of a squeeze on eBay, which does not offer fulfillment, distribution or logistics and is a less attractive platform for local used-goods sellers compared to say, Gumtree.

Fourth, Amazon is making a play for the Internet of Things (which, for this discussion, includes drones), but both Apple and Google, via their hardware devices, OS capabilities and cloud services, will doubtless give Amazon a run for its money. Also, watch for how Blockchain will impact this sector.

Finally, payments, AI, robotics, analytics and location-based services all continue to bubble along – driven by, for example, crypto-currencies, medtech, fintech, big data and sentiment-based predictive tools.

Next week: Another #pitch night in Melbourne…