The recorded music industry is at a cross roads. The future is using data to support creativity.
The recorded music industry is at a cross roads Having been ravaged by the mp3 era and rampant sharing / piracy in the 2000s, the record companies managed to get back on their feet with the streaming revolution of the 2010s driving double-digit year-on-year growth, much of it through the reinvigoration of the labels' vast music catalogues in this new "access" model. However, where next? Premium subscription growth is slowing in major markets, and there appears to be no obvious new music format or business model on the horizon that is going to drive any serious growth for the industry. This is set against the dual disintermediation threat of a not-yet-profitable Spotify, their big tech rivals, and their increasing editorial power to break new artists or resurrect old ones; and the increasingly independently-minded artist community, who can build their own audiences through social media and distribute directly to music services through a new breed of digital aggregators, while retaining ownership of their rights.
The record companies need to be great at marketing Increasingly reliant on their catalogue assets, what is the record companies’ future role for the artist community and how do they maintain a competitive edge against platform "frenemies" such as Spotify? Their core capabilities of A&R (Artists & Repertoire i.e. signing and developing new talent) and promotion are critical. Artists will sign to a record company for creative ideas and the prospect of breaking through on multiple platforms on a global scale. Fans (or consumers) will connect with a record company for multi-platform creative experiences around their favourite artists. The record companies need to be great at marketing.
The future is data driven The traditional music promotion levers are disappearing. Relationships with old tastemakers such as radio producers, TV bookers and journalists have lost their importance, overtaken by streaming's editorial playlists, YouTube and social media platforms such as Instagram and TikTok. These are the new critical promotional channels to break new artists and drive music discovery. The difference between these new kings of music promotion and the traditional ones? Data. In this new tech-dominated world nearly everything is data-driven. Spotify make editorial decisions based on data. Google and Facebook, and the new kid on the block TikTok, decide what to promote using data algorithms. The music industry's future winners will be those that can collect and analyse the vast amount of data that is generated through the consumption of music content, and crucially translate it and scale it in to effective and actionable strategies and tactics for creative marketing (AKA A&R and promotion).
But data and the art of music are not easy bed fellows Say to a songwriter or a producer that their art should be "data driven" and they will hate you. Music creation and data don't meet (unless you count AI music, which is an entirely new conversation, but not unrelated). So, how do music industry practitioners use data to improve their creative marketing capabilities? To borrow a silicon valley buzzphrase, marketers have to use data to fail fast and fail cheaply, and to allow space for creativity. The record companies have always supported the careers of ~20 artists for only one of them to become profitable. This is nothing new. Through the better use of data can this be reduced to ten or five artists for every one successful one? Can this principle be applied at more granular levels, such as using data to choose which songs to back, which audiences to target, which videos to promote, which featured artists to engage with, which social media themes to align with? Of course the best marketers are already doing this, but it needs to be more effective, and it needs to be the norm.
Creativity is critical Artists will sign to record companies for creative ideas, and fans will connect with record companies for multi-platform creative experiences around their favourite artists. The music industry is called a creative industry for a reason. In this new world of high velocity music marketing - where as many tracks and artists as possible are thrown out there with the hope some of them will stick - space required for creativity has been lost. Music marketers are juggling 10-15 or more artists each, spinning many plates, replying to many emails from neglected managers. For humans to be creative they need the headspace to think, to research, to soak up cultural signals from the external environment, and to try stuff without fear. Data needs to come to the rescue to deliver workflow efficiencies, helping labels to find and back the best music in the world, and giving them the space to create launchpads for the future catalogue artists of the next generation.
