Wednesday, March 6, 2013

The Next Era Of The Music Business

Cloud Music image from Bobby Owsinski's Music 3.0 Blog
Regardless if you're a musician or music consumer, your music life is about to change. Slowly but surely digital music distribution has been evolving from downloads to streaming, but that transition has been really picking up speed over the last 12 months. With Spotify leading the way thanks to reams of publicity, more and more consumers are finding that the joy of renting music beats owning it by a long shot.

While it's been long rumored that Apple has their own streaming service up their sleeve, several developments reveal the change that is about to come.

First is the fact that Jimmy Iovine's Daisy project (named after the first computer generated song) just received a $60 million injection from the likes of Warner Music Group's owner Len Blavatnik, Fort Worth billionaire Lee Bass and Australian financier James Packer. This is a serious investment by some deep pockets that know what they're doing and don't like to lose. Then comes word that Apple's Tim Cook recently took a meeting with Iovine to be briefed on the project. Does that mean a collaboration? We don't know, but at the very least, Apple has a good working relationship with Iovine, since he was one of the first to sign Universal Music onto iTunes back in 2001. Together they'd be a powerhouse, a true 1200 pound gorilla. Chances are that Apple will chose to go it alone and just stay at 800 pounds though. It doesn't need a partner, but if there's something there worth buying, they have lots of money.

Then comes word that Google has been quietly making deals with all the major labels for their own YouTube-based subscription streaming service to be launched later in the year.

If all this were happening a couple of years ago we would've looked to only one of these prospective services to be left standing at some point, with the others falling by the wayside. But this is a different time, with the streaming business far more mature thanks to the likes of Spotify, Pandora, Rdio, Slacker, et al. It's now probably possible that all of these new services survive if they're at least half-way decent in their user operation and offerings.

This is definitely going to be a big win for consumers, with nearly an unlimited selection of songs available for a relatively small monthly fee (not sure what the price point will end up being, but $9.95 keeps being mentioned). Consumers are quickly seeing the advantages of renting their music.

It will be a different story for artists and songwriters however. By now everyone knows how little the royalty can be from a stream, with stories abounding about income lost by the writer and artist. Although a full transition to streaming will be a godsend for the labels, with steady monthly income actually bolstering their bottom line, you can bet that not much of that will trickle down to the artists - at least at first.

It's not going to happen overnight, but within a matter of time, you'll see the entirety of the management and law categories of the music business devise a better way to get paid, and eventually force the labels to fall in line. And when that happens, it will trickle down to the DIYers who insist on doing it their way. To what degree this all takes place, we'll have to wait and see.

While this blog is aptly named Music 3.0, we're about to see the next stage of the music business. Welcome to Music 3.5!

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1 comment:

Rand Bliss said...

Yet another digital nail for the artist's coffin...

For the real reason why the major labels are salivating to join the party, read:

Will Music Streaming Kill The Music Business For Good?

Moses Avalon

The trend of “access over ownership” has been lauded as the savior of the industry, but will subscription services, like Spotify kill the lifeline of most artists and record company revenue—physical ownership and downloads? And if so, why are major labels supporting it?

Is there an unholy alliance between labels and streaming services?

This three part series will rip apart much of the mythos behind this new revenue stream and expose a hidden agenda that will open your eyes if you are an artist, manager or someone who is in the creative supply chain.

Web version only:


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