Panelists at the Ny:Lon Connect event in Manhattan on Tuesday discussed streaming’s globalizing effects on the business.
Even with the turnaround news of the last few years, there could be more good news ahead for the music industry, according to panelists at the Ny:Lon Connect event staged by the Music Business Association and Music Ally on Tuesday (Jan. 23) in Manhattan.
The industry has some very deep platforms either entering into the space, engaged in improving and/or building out their music services, like Amazon, Facebook, YouTube, Apple and Pandora, Universal Music Group senior VP of digital strategy and business development Jonathan Dworkin told attendees. “The other interesting thing is the explosion of markets with music that weren’t on [our] maps before. You have 600 million people engaged in free streaming through Tencent [instead of engaging in piracy] in China. What is happening in India is absolutely amazing. Data became much less expensive there, almost free, and consumption has exploded.”
So between these platforms building incredible service and taking them to new territories, that’s one thing. But the other thing, according to Warner Music Group senior VP of global business development & strategy Tracy Gardner, is that the services realize that one size doesn’t fit all.
In one foreign territory, a service is offering something like 300 free downloads the first month, but why offer downloads at all when the service allows for streaming at any time and, if offline, a cache? The people living in that territory are used to having unlimited downloads and before that there use to be rampant piracy, she noted, so the local services are building services designed to attract natives who are used to how digital music has evolved in their local markets. “Between the platforms building out their eco-systems, the pure plays building great consumer experience; and the local services tailoring for their respective individual markets, you have all these tensions working together and building growth,” said Gardner.
As well, in addition to curators driving discovery through playlists, the charts themselves are exposing consumers to music that is different than the playlists. So, she added, charts are also driving popularity at these services in these markets.
Finally, Gardner noted that in the summer, streaming activity dips in the northern hemisphere but it picks up in the southern hemisphere, which balances out things. Yet, music is organized differently around the globe. “If you ask what genres are big in India, there are only two categories: dance and love; it’s not organized there by genre or artists,” Gardner said. So services are organizing music in different ways in different markets.
What all this means is artists are no longer talking about breaking in your home town, they now have access to a global audience.
Ultimately, many in the industry hope everything evolves to a paid subscription service, but some markets aren’t yet built for that. So in markets where credit card penetration is low, they have had to find different ways to bill. For example, maybe music is being offered through the telco on a pre-paid basis, Gardner said.
But, as Dworkin pointed out, reoccurring building on pre-paid is hard to do. Some countries have 60-70 percent payment failures, so the churn is going to be high, he added, yet noting that “some services are getting good at managing that scenario and are good at engaging those consumers to keep them going through the cycle.” The goal is ultimately to move them from free up the chain to paid, which Spotify is very good at, said one of the panelists. If the customer falls back down the funnel to free, at least you have a chance to win them back as paid subscribers, Dworkin said.
Meanwhile, as the services learn more about their business — a Spotify executive in a later panel said the company is still in the second inning of where the game is going to go — and how to engage their subscribers, the labels have to learn new things too. With voice activated listening kicking in in a big way, the labels are trying to come up with new ways to be smarter with and provide more metadata in order to improve all the ways the consumer can search for music through voice activated devices.
When you get to the point where you have voice activated devices in every room and in the car, it is creating more touchpoints, since so far 80 percent of the use of those devices is for listening to music. Meanwhile, Dworkin said, high resolution audio will allow pricing segmentation to emerge as services evolve.
But one potential downside is that music is in danger of taking a backseat in consumers’ lifestyles, instead of the main focus it used to be when music buffs would come home and put a vinyl record on the turntable. “I do worry the music is becoming an ‘and’ experience,” Dworkin said. “I am driving and listening to music; I am at the beach and listening to music; I am at the gym and listening to music. yet, this type of development will likely drive further innovation around driving the consumer experience.”