On the surface, not much. But beneath, these news headlines are just three more recent reflections of what MIDiA has identified as a new iteration of the music business. Buckle up, because we are entering the platform era.
In this new landscape, audience and creator platforms are often better primed to serve both artists’ and fans’ needs than traditional stakeholders, with implications across the value chain. This shift did not come out of left field, but is rather the culmination of years of gradual changes in the way artists approach their careers, how listeners consume music, and how tech platforms have evolved. The catalysts of the platform era and its implications form our latest report, ‘The future of music: The rise of a counterculture industry’, available for MIDiA clients here.
The music landscape is at a tipping point
Streaming may have revived the music industry as a whole, but the second-order impacts of the format shift are becoming clear. Streaming hinges on scale above all else, and treats every listener the same, regardless of their level of fandom. It follows that mass, but passive, audiences become more important than fans, and songs more important than artists. All of this has contributed to turning music into a passive, background activity, and one that brings very few artists meaningful income. The attention recession only exacerbates these challenges.
As more artists recognise this reality, they are seeking out new sources of revenue and ways to build and monetise real fanbases. In fact, the more artists earn, the less of their revenue comes from streaming. Instead, they are selling their skills through avenues like sample marketplaces, as well as monetising the content surrounding music rather than the music itself (e.g., Twitch live streams, exclusive content subscriptions, or, in Snoop’s case, virtual marijuana). Many of these new revenue streams hinge on the artist-fan relationship, which means separating out the high-contributing superfans from the low-contributing passive listeners.
These shifts in the artist mindset might not be enough to catalyse a counterculture music business, were it not for a consumer behaviour shift that cannot be ignored. As MIDiA has covered in depth, it is clear that both younger generations as a whole and the biggest music fans are seeking out active, participatory experiences with music. Passive consumption is no longer enough, which is why we have seen Spotify test a number of social tools recently.
Thus, momentum towards change is coming from three directions:
Streaming has contributed to turning music into a background activity
Artists are seeking out better remuneration (which means going beyond streaming)
Music’s key audiences are seeking out active, participatory experiences with music
Enter the platform era
Where does all of this lead artists and their listeners? Not necessarily towards record labels or traditional streaming services, which (at least in the West) do not offer much in the way of active, social engagement. Instead, these needs are driving artists and fans towards audience and creator platforms with opportunities for direct-to-fan relationships and better remuneration, from TikTok to Splice. In turn, platforms are beginning to offer more and more ‘traditional’ music industry functions, with TikTok’s distribution tool as one example. Rather than acting solely as partners to record labels and publishers, platforms are quickly becoming competitors (or at the very least, frenemies).
So while the traditional, streaming era business:
Monetises rights to recordings
Equates all consumers by squeezing fans into the same revenue pot
Depends on scaling mass, passive audiences
The new, counterculture business:
Generates revenue from the content surrounding music, in addition to the music itself
Identifies different levels of fandom and monetises them accordingly
Depends on the artist-fan relationship
It is time for traditional stakeholders to recalibrate
In some ways, this ‘counterculture’ is a return to form. Streaming erased the demarcation between passive audience (previously monetised by radio) and engaged superfans (previously monetised by retail). The new business is about re-extracting those engaged listeners, as well as bringing back the sense of ownership that pre-streaming formats (downloads, CDs, vinyl) provided. Past transformations in the music industry have been about format shifts — but this time, it is the shifting mindsets of both creators and consumers that are driving change.
What does this mean for traditional stakeholders? As a new set of audience and creator-led companies expand their reach, ‘traditional’ players must innovate and reposition their value. While the music industry has long treated recordings, publishing, audience, and creation as separate sectors, the next generation music companies may well sit at the intersection of all.