- Mar 30, 2021
- 4 minutes
10 large trends dominating the western music industry
The current growth of the recorded music industry has injected great optimism into the business, yet the market is undergoing dramatic changes. We describe ten trends that will change the music industry in this article, and we reached out to these important considerations with real-time insights from British music group, Miccoli. The Indie Pop music which takes inspirations from Alternative Rock is a band made up of three siblings: Adriano Miccoli, Alessio Miccoli (piano, vocal and acoustic) and sister Miccoli, both (vocal and acoustic, vocal, piano, and harmonica).
The Brummie band helps us count on the current trends in the music industry which continues to impact how every individual artist and music group takes on their journey:
Streaming outperforms radio:
Only 39% of 16-19-year-olds listen to the radio, while 56% use YouTube to listen to and discover music instead. The Generation Z does not know the radio and is very unlikely to come to its adoption, so if it comes to launching a new artist aimed at young audiences, radio is no longer relevant. Additionally, the popularity of podcasts is stealing from radio's older audiences. We are facing a significant change.
Streaming vs Inflation:
The streaming industry has been overtaken by inflation. The standard price of a subscription of $ 9.99 is today equivalent to $ 13.36. However, no service has raised its prices, in stark contrast to Netflix, at least in the US. For Netflix, it is easier to adjust their prices for inflation since they have original and exclusive productions. Still, music streaming services need to find a solution to be able to adjust as well. A general increase to $ 10.99 would be a good start, and the fact that many iPhone users pay $ 13 (for iTunes' 30% surcharge) shows that there is tolerance in the market for higher prices.
A great catalog has been the investment fund of record companies for years. However, most streaming revenue is generated by current music, so the value of catalogs is being redefined. For example, in the streaming world, the Spice Girls are worth more than The Beatles. Record labels can still draw large revenues from established artists, with special editions and packages, but a new long-term approach is needed to reassess the catalog. The situation is complicated if we consider the fact that record companies are increasingly signing label services agreements, instead of keeping the ownership of the rights to the songs to continue building the catalog.
The record company as a service provider (label services):
Artists can now create their own "virtual labels" by making use of different services at their disposals such as 23 Capital, Amuse, Splice, Instrumental and CDBaby. A logical initiative would be for a new player to bundle all of these services on a single platform (Spotify perhaps?) Record labels need to get ahead of this trend, better communicating the capabilities they can offer beyond the technical, such as dedicated staff, expertise, mentoring and support for artistic development.
Break in the value chain:
The label services are just one part of a much broader trend break in the traditional value chain, with various stakeholders interested in expanding their roles, from streaming platforms by signing directly with artists to record launching their streaming services. In this scenario, things can get quite complicated.
Content Packages: Amazon pioneered offering content packages with its Prime subscription, which includes free shipping, streaming video, books, and a small music catalog. Apple is expected to do the same soon with its new Apple TV, which would represent that music is becoming just one part of the content offering of the tech giants. Like the content, it will have to fight hard to excel, especially in this panorama of ultra-competition for the attention of users.
Streaming, and especially YouTube, propelled Latin music onto the global stage and very soon we could see Spotify doing the same with the music of artists from India thanks to its recent agreement with T-Series in that country. The traditional industry response has been to pair some of their artists in collaborations with Latino artists. The thing to understand here is that what appears to be a global trend may not be, but be a reflection of a regional fan base. The business has always seen Anglo-Saxon artists as the superstars, but in the future, we will see audiences much more fragmented and more regional diversity.
Five years ago, artists still wanted to record entire records. Now, artists of the streaming age don't want to be limited by the format of the album but want to release new tracks periodically to keep their fans captive for longer. The record is still essential to more established artists, but its importance has waned for the new generation of artists.
Record labels must find a way to accelerate their adaptation to the new post-record economy, in which profit margins caused by fragmented sources are reduced, although the amount of investment required remains in regarding marketing and artist development.
Search for a new format:
In 1999 the record industry was booming, cemented into an established and successful format that had no successor, and 20 years later, we found ourselves in a similar situation with streaming. Valid format changes will no longer exist, as there are no longer physical formats dedicated to music. However, there is potential for new business models, with China as the forerunner: streaming has monetized consumption, it is time to start monetizing the fan base.