It’s clear to me that 2018 – the year we’ve all been waiting for with grave anticipation – will revolutionize the music industry.
I’m sure you all have questions about what’s to come: Who will become more powerful: artists, streaming platforms or labels? How might cryptocurrencies and blockchain impact the business? What will live music look like in the digitally-obsessed world?
But before discussing the future of music, let’s put the current state of the industry into perspective.
It took almost a century to leap from record players to a thousand songs in the palm of your hand.
Now, in virtually a decade, we’ve surged from 99 cents per song to limitless tunes, synced across multiple platforms with automatically tailored playlists.
It is clear that the world of the music industry is accelerating. So what does this mean for 2018?
Artists Will Have More Power Than Ever Before
Since the vinyl days, digital music has made it easier for artists to get discovered, build a following and grow their career – all on their own.
As I’ll discuss later, artists no longer need to sign with a label to thrive in the industry. Take Chance the Rapper for example. Chance has never signed with a label, yet he is one of the most well-known rappers today.
Technology ultimately has enabled artists to reach more people and better understand their fans.
With tools like Spotify for Artists, musicians can share and promote their music, while tracking their success along the way.
This greatly impacts artists’ ability to connect with fans. Spotify’s artist dashboard keeps musicians close to their followers while providing deep listener insights (including song performance and listener demographics).
New technology also allows artists to reach more people. Spotify’s daily mix, discover weekly and Fresh Finds playlists make it easier for people to stumble upon new artists, while related music algorithms increase the chances of artists’ tunes hitting new audiences once a playlist ends.
Furthermore, Instagram is a tool that is freeing artists to promote independently.
Artists are now empowered with sophisticated data to make well-informed decisions, such as which cities to hit on tour (based on fans’ geographical locations), who to target with tour ads (based on CRMs with Spotify data) and where to find new audiences (based on related artist algorithms).
If artists weren’t already almighty in 2017, as streaming algorithms and CRM data enhance, artists will undoubtedly become even more powerful in 2018.
Spotify will NOT become the “Netflix” of Streaming – But WILL Provide more Tools for Artists
Spotify and Netflix are both online media companies charging a monthly subscription fee. However, the major difference between the two titans (besides music and film) is content creation. For Spotify to become the “Netflix” of streaming, they would need to produce music themselves—competing with some of the major labels they depend on.
Netflix’s decision to build their own content pushed some of the major film production companies to separate from the site (like Disney). But, unlike Spotify, Netflix can afford to lose this content.
Music, as opposed to film, is not substitutable. Listeners want access to all songs from their past (such as “Twist & Shout” by the Beatles and “Wannabe” by the Spice Girls) as well as the current “Global Top 40”.
Ed Sheeran’s “Shape of You” was the top streamed track in 2017. Imagine users’ reaction if the song were to disappear from the site. Music is simply irreplaceable.
If one of the major labels pulled out of Spotify, this would cause mass devastation to the company’s content collection, and thus their success. Therefore, it is critical for Spotify to maintain its relationship with the entire industry (artists and labels alike).
Considering Spotify’s dependence on external music producers, it is unlikely they will begin creating their own music in 2018. Rather, the company will continue empowering artists with the tools and connections to build their careers.
Spotify is already revolutionizing the industry – combining data, discovery, promotion and revenue for artists. In 2017, the company released Spotify for Artists and the accompanying app. In 2018, Spotify will likely continue adding tools to artists’ arsenal—with merchandise assistance, live performance updates and other parts of their career.
More Music Festivals will Use Fan Data to Choose Headliners
Gone are the days of choosing headliners and then finding people to attend your festival. More and more music festivals are choosing their headliners directly from their fans’ requests and listening data. In 2018, this technology will be more accessible and intelligent. More music festivals will begin using their fan’s data-driven music preferences (i.e. artist, song and genre interests via Spotify) to inform their headliner decision.
If you think this is merely a future pipe dream—think again. Okeechobee recently pioneered an impressive example. The Florida-based music festival leveraged a Lineup Predictor campaign to better understand their fans’ preferences. Armed with this data, the music festival used fan suggestions and Spotify listening behaviour to help define the most popular headline choice for their next event.
That’s right. The future is here, and it’s about to make your festival experience even more catered to fans.
Labels will Reevaluate their Purpose—Will Labels and Promoters Merge?
Today, the label business is somewhat of an ancient concept. The term “record label” alone dates itself, originating from the physical labels appearing in the center of vinyl discs.
Thanks to streaming, physical music is quickly becoming a thing of the past. Artists no longer need a record deal to be discovered. Online platforms empower artists to get their music out independently—without additional charges to the middleman.
In response to digital music, labels have moved to 360° deals. 360° deals offer artists more support in marketing, financing and touring—at the price of more shared revenue sources (music sales, live performances, merchandise etc.).
The average major label contract leaves artists with merely 15 per cent of earnings from a release, which many view as too much.
As mentioned earlier, the most prominent artist to eschew labels is Chance the Rapper. In 2017, his song “No Problem” was written about his desire to keep labels far away from his music. That song alone won Chance best rap performance at the Grammys.
But Chance is not the only musician to declare independence from labels. Many artists, including Zoe Keating, have become the master of their own brand.
Some artists even took it one step further. Rather than merely boycotting labels, some stars have decided to beat them at their own game by creating label companies of their own. Prince created NPG records, Kid Cudi created Wicked Awesome Labels and OK GO created Paracud, among others. With their vast expertise in the business, these artists are able to help up-and-coming musicians break their way into the spotlight without the need to sign to a major label.
The decreasing need for labels has forced smaller ones to amalgamate into the three major companies: Universal, Warner and Sony.
Promoters on the other hand, help artists where they need it most: the physical experience of their music. Promoters organize gigs and advertise shows to fill stands with paying fans.
Promoters are masters of the physical world, yet they still have a deep understanding of the digital world of fans and the data that drives their preferences. Best of all, promoters allow artists to keep a larger share of their overall earnings.
Although the concept of labels still exists in 2017, their purpose is transforming. As artists gain more and more power, it is clear that labels will need to reevaluate their role in the industry.
All of this begs the question: is there a need to have both labels and promoters? Or will their roles merge and one day become synonymous?
More Artists Will “Tokenize” their Business for Innovators + Early Adopters
Most artists want nothing more than to be the master of their own identify and connect with true fans. Yet, it can be hard to surpass industry gatekeepers and avoid paying the middleman.
The hierarchy in music and commerce often forces up-and-coming artists to sign with profit-cutting labels just to raise money to support themselves and their aspirations. Also, any profit that is earned is often taken by middlemen (bankers, transaction fees etc). But there’s a new innovation in digital currency that nobody in music saw coming:
Cryptocurrencies are changing everything.
Many artists now offer their merchandise and show tickets via cryptocurrencies. For example, G-Eazy, Mariah Carey, Motorhead and more are accepting Monero cryptocurrency for holiday sales.
Allowing fans to purchase through cryptocurrencies can be a powerful tool, freeing up musicians’ previously cinched profit margins. Cryptocurrencies remove bankers and other middlemen from the transaction process, so artists can deal with their fans directly.
However, other artists are not merely expanding the types of currencies they accept, but transforming what it means to be a truly invested fan.
The Slovenian musician, Gramatik, was the first artist to tokenize his business and launch his very own GRMTK cryptocurrency.
Tokenization lets artists raise capital upfront without relying on an advance from their record label. Through an initial coin offering (ICO), artists can earn the funds necessary for economic growth and career success.
Tokenization enables fans to profit from the achievements of their favourite musicians. Fans essentially become investors in their idols by purchasing their currency. As music sales and royalty profits increase, so does the value of musicians’ tokens. If someone pays a dollar for the artist’s content, then all token-holders will receive a proportional share of that dollar. This creates a mutually-beneficial ecosystem of like-minded individuals where everyone prospers from their musicians’ economic success.
Gramatik declared in a press release “GRMTK isn’t just a cryptocurrency, it’s much more than that. Now, my audience can share in my inspiration and success by also owning the rights and royalties of my music, and anything I create and distribute on my upcoming channel.”
Will more artists begin to “tokenize” their business in 2018? Given the positive implication it has for artists, yes. However, this model is still distant from becoming mainstream.
Musician tokenization hinges on attracting consumers to buy in. Although there are incentives for both artists and consumers, in 2018, the adopters of artists’ currencies will be limited to only the most devoted (and tech-savvy) fans. I wouldn’t be surprised if ticketing platforms jumped on this trend as well, offering cryptocurrencies as a way to buy tickets. This may even help with the notorious issue of scalpers and bots snatching up valuable seats before real fans get a chance to buy.
The Number of Non-Traditional Popup Gigs will Increase
In the past, live performances were generally reserved for large arenas, featuring one of the few well-known artists of the age. Catching an underground or up-and-coming artist in an intimate or unconventional location often involved being in the right place at the right time.
I recall once during university I was walking home after a long day of studying, and was shocked when I saw “Barenaked Ladies” featured at the campus pub. Naked ladies? On campus? This was how I discovered the band: a rare but impactful live performance.
However, the days of “stumbling upon” artists are over. Now, if you want to catch an intimate gig—no matter if they are playing in a hole in the wall garage or in an intimate living room—the technology is available to make that happen. It’s even possible if you’ve never heard of the artist before.
Non-traditional gigs will continue to grow in 2018. Consider the success of Sofar Sounds. Sofar Sounds is a startup specializing in secret shows held at unusual, spontaneous locations. The company has hosted more than 4,000 events, featuring over 12,000 artists and even received significant investments from Sir Richard Branson.
The rise in non-traditional gigs is also evident through Airbnb’s interest in offering “Music Experiences” – bringing artists to rentals for informal shows.
“Music is an incredible way to bring people together,” says Airbnb CEO Brian Chesky. “We’re launching Music Experiences to give people access to exclusive and immersive music events, from intimate live performances [to] special pop-up gigs, underground music sessions and meeting local artists and performers.”
A recent Eventbrite white paper found that demand for nontraditional event venues will grow 3.8 per cent in 2017. I predict this trend will continue into 2018.
Talent Buyers will Use Data to Help Guide Decisions
Talent buyers are the individuals that book bands for venues and events. It’s their responsibility to understand the audience in their region and book bands that appeal to that market.
Talent buyers often have a meticulous process to organize talent information to make informed decisions. This process may include mind mapping, geographical mapping of artists and fans, as well as other techniques of manual information organization. In the past, all of this data aggregation has been done manually (either in their head, on paper, on a whiteboard or on a map)—until now.
Fan CRMs, listening data and advanced algorithms make it easier for talent buyers to understand their audiences and track artist affinities. Although talent buyers’ “gut decisions” can never be replaced with technology, 2018’s enhanced technology will help more talent buyers confirm their intuition with fan data.
Blockchain Might Enhance Music Ownership Attribution, But the Technology Will Not Be Adopted
Music rights today are anything but transparent. According to a 2015 Berklee Study, “20-50 per cent of music payments don’t make it to their rightful owners”. Ownership attribution is often not traceable at all, causing a large burden to artists, music services and titleholders alike.
The issue derives from the lack of a central database to track who owns the rights to music. Thankfully, tech junkies are laying the groundwork for a solution to this issue. Enter blockchain.
You’ve probably heard of blockchain with regards to cryptocurrencies (like Bitcoin or Ethereum), yet its applications are much more widespread.
Blockchain is effectively a decentralized database for records (called blocks or hashes), which are linked and secured using cryptography. Participants can then record the ownership of a piece of data, without the need for a central entity.
A music blockchain would be a single place to publish all information about who made and who owns a song. It could also provide data on who accesses the music, without having to rely on a third-party organization.
For detailed information on how this technology might work, visit mediachain.io. As the name suggests, Mediachain is a blockchain company solving media ownership attribution. The company was recently acquired by Spotify – a powerful force in music.
An added bonus to this technology is automated payments. Considering that licensing information would be machine readable if using the blockchain, transactions could be made automatic via cryptocurrencies and smart contracts. Purportedly, the music data (including the song file, lyrics, ownership rights etc.) could be enveloped in a file “wrapper”, containing the information of ownership, the cryptocurrency key of who to pay and more.
However, it is not a question of whether or not the tech will be available in 2018, but a question of whether it will be adopted. The demand for transparent music data is evident, but the incentive to supply it is less clear.
Who will participate in the blockchain to keep a copy of all of this data (i.e. who will be the miners and what is their incentive)? Who will pay for the computing resources to execute all the smart contracts for each and every song? How will we dignify the main database, without further confusing the data by making multiple formats? How will the data stay objective if it’s bought and owned by a large player in the music space?
These questions will need to be answered before the technology will be widespread—which likely won’t be in 2018.
Humankind’s desire for music is core to our being, yet the music industry that supplies it is built on an outdated structure. While many pieces of the industry are expected to continue developing quickly, some long-held systems may take longer to adapt, including music file formats, label adaptation and the currency we use to purchase music experiences.
Although there are some powerful influencers in the industry—three major label companies, a handful of streaming sites and an increasing number of artists—we mustn’t forget the power of the individual fans who decide which artists are heard and adored.
In the end, the fans will be the ultimate drivers of change. The more we focus on fans and understanding their needs, the better we’ll be able to cope with a rapidly evolving industry.