As noted in today's Event of the Day, this week's theme is the future of the music industry. A major impetus is David Kusek and Gerd Leonhard's The Future of Music: Manifesto for the Digital Music Revolution. This book should be required reading for anyone interested in the music business.
Scenario planning entails defining 4-6 disparate visions of the future of an industry, a company, strategic business unit, or global challenge issue, such as global warming. The Future of Music book defines one vision of the future that the authors call "Music Like Water," by which they mean that streaming music is available everywhere, much like water. They envision the evolution of business models, distribution channels, industry structure, and network and computing technologies such that music is available all the time in virtually all places on all devices. In The Music Like Water future, musicians are more empowered than today because the quintessential relationship is between the artist and the fan or consumer, which is to say that music is an experience rather than a physical product or a file to be download. The music experience is king (or queen).
Part of the support they offer for Music Like Water future is a discussion of 10 key truths about the music industry that reinforce the notion of music as experience and the primacy of the artist:
- Music matters more than ever: the music market is alive vibrant.
- The record business is not the same as the music business.
- The artists are the brands, and entertainment is the main attraction.
- Artists and their managers will shape the future.
- Publishing income is a crucial income stream.
- Radio is no longer the primary way people discover new music.
- Digital niche marketing outperforms mass marketing.
- Customers demand--and get--increasing convenience and value.
- The current pricing model goes out the window.
- Music is mobile, and new models will embrace a more liquid view of music.
Yes, there is a thriving music industry; this despite plaintive cries to the contrary.
By this Kusek and Leonhard mean that the business of manufacturing, distributing, marketing, and selling CDs--music publishing--is only a limited part of the business. "Music and event merchandising, concerts and touring, and live entertainment in general account for $25 billion globally, while music publishing is a $12 billion business, approximately" [p. 21].
In Kusek and Leonhard's view, the primacy of the artist stands in contrast to the primacy of the labels and distribution companies.
"Going forward, managers are likely to play a much bigger role as the central pivot point for business decisions, from publishing to marketing to touring and merchandising. Managers will lead the charge because their fame and fortune is directly linked to that of their artists" [p. 24]. I don't find this to be compelling point however true it may turn out to be in the future. I can easily imagine a utility future in which the aggregators and distributors rather than artists and their managers are the pivot points.
This point is actually about royalties, specifically, that copyright laws need to be fixed to get artists a fair share of the revenue from the digital distribution of music. It should be noted that Kusek and Leonhard are not anti-copyright per se, this despite their being at least skeptical, if not largely negative, regarding the use of technologies to enforce copyright.
A key point here is that digital music services and the net generally provide a variety of means for fans and artists to discover each other, which leads to the next point.
In music, as elsewhere, microsegmentation, "markets-of-one" and similar marketing and distribution strategies are increasingly important.
iPodding and podcasting. 'nuf said.
Subscription rather than by the file(track) or CD will prevail. Music subscriptions will be inexpensive. In fact, Kusek and Leonhard argue that a substantial portion (50%-60%) of revenue may come from advertising, merchandising, sponsorships, tie-ins, and the like.
A combination of more capable devices combined with ubiquitous wireless (near-)broadband will mean that music consumers will be able to get the music they want when they want it and where they want it. I'm not so sure that this translates to inexpensive given the capital costs of the advanced cellular build-out. However, as noted in the previous point, complementary sources of income may help to keep the price of music low(er).
Bottom line: Kusek and Leonhard have written an important book that outlines and argues on behalf of the Music Like Water future, a future that I'll refer to as the Music Utility. I'll suggest some alternative visions or Endstates in subsequent articles.