The music industry’s tipping point is Right Here, Right NowStreaming is buckling under its own weight. The economics and structure that served it well in its first decade are not the ones that will get it through the next ten years. You might say that streaming is going through its ‘start up to scale up’ phase. AI is the disruption lightning rod of the moment, but transformational as it may prove to be, it is simply catalysing pre-existing disruptions. ‘Fixing’ the problems thrown up by AI would be dealing with symptoms rather than causes. The music industry is at a tipping point. There is still time for the creators and businesses within it to help shape what comes next, but that window of opportunity is both small, and closing.

Is anyone earning what they want from streaming?

When streaming first emerged, artists were worried it would not pay them enough; then the debate moved on to whether too much value lay with the biggest artists and labels; now with the superstar artist production line stuttering, the majors want a new royalty system to protect their income. Meanwhile, Spotify still struggles to generate a consistent profit. So the long tail, the majors, creators, and streaming services all think that streaming isn’t paying them enough. Which begs the question: just who or what is streaming paying enough?  Whatever the answer may be, the clear takeaway is that a royalty and remuneration system designed when albums, charts, downloads, and radio still ruled the roost, is failing to adapt to today’s much changed music world.

Remuneration pains are a symptom of consumption

A host of potential innovations are vying to be the solution to streaming’s remuneration woes (fan powered / user centric, two-tier licensing, etc.) but royalty challenges are the output, not the input. Streaming has shifted the majority of music behaviour from active listening to lean-back consumption, using algorithms to push consumers towards niches. The result is a consumption landscape shaped by fragmentation and passivity. There is a lot more consumption than before, with more consumers monetised, but the previous, finite artist economy has been replaced by an in-effect infinite song economy. Consumption needs ‘fixing’ before remuneration. 

While there are encouraging shifts towards monetising fandom, those tools will never have full effect if audiences are simply spending their time listening passively. There will, quite simply, be no fandom to monetise.

Machines on all sides

These are the two key sets of market dynamics that AI, and some other emerging technologies, will make worse, not better. Lean-back consumption is where AI will have the biggest, near-term impact. Context based playlists deliver music that is good enough. It is all about the overall soundscape rather than individual tracks, and even less about the artists. Production music libraries, like Epidemic Sound, have already shown that their music is plenty good enough for such playlists. Generative AI is waiting to pick up the baton, and may be able to do it even better if the music is specifically designed for the hyper-specific music that algorithms have taught consumers to expect. What is more, generative AI can get even more specific by evolving to the listener’s use case (i.e., like Endel). And if DSPs were to generate AI music themselves, then they could a) improve margins; b) stuff playlists; c) push users to the music. They who control the algorithm, control the listener.

And if that wasn’t bad enough for traditional labels and artists, a rising wave of virtual artists is hitting the market, such as K-pop acts Mave, Plave and Eternity, building on the foundations laid by the (now almost heritage) trailblazers like K/DA and Aespa. And even if these virtual artists have humans behind them, they are still a machine-centred challenge to wholly human artists (slightly crazy we even have to think in those terms these days!)

So, machines are opening a two-pronged attack on traditional labels and artists: 1) AI is competing for lean back, while 2) virtual artists compete for lean in (fandom).

Choose your poison

The industry’s strategy is to compel DSPs to take down problematic AI music and to keep the long tail in check with lower royalty rates. But that is unlikely to be enough. For example, why wouldn’t superstar virtual artists be eligible for the same royalty rate as superstar human artists? Regardless of whether the superstars are virtual or human, arguments that superstars deserve higher rates for pulling people to DSPs in the first place becomes less convincing every day, as consumption becomes ever more fragmented and ever less reliant on superstars.

But the scale of this problem is about to erupt like a volcano. Because the existential threat will come from AI in the hands of humans. AI will accelerate the consumerisation of creation trend that has been harnessed by artists and fans alike on TikTok, Snapchat, BandLab and a host of other places. Throw simpler-than-simple generative AI into social platforms and suddenly you have the potential for consumers creating ‘music’ at the same rate they create photos and videos. 

Millions of new ‘songs’ every day would break streaming royalties. So, labels would just get DSPs to keep those tracks off streaming, right? Not necessarily. These would be tracks made by people, so they would bring with them ready-made audiences of friends, family, colleagues and connections. Everyone becomes a fan of everyone else. It is the zenith of the network effect. And AI creations do not need to have millions of streams to disrupt streaming economics; millions of them only need to have at least one stream each.

And if friends can’t listen on DSPs, then they’ll listen on the social apps. Which means less time spent on streaming and further cultural dilution for DSPs. As one investment analyst put it to me: labels are faced with a ‘choose your poison’ choice, i.e., lower royalties now (due to dilution) or lower royalties later (due to smaller user bases).

Build a better train?

The entirely understandable temptation is to make what we have, work better. But sustaining innovation is unlikely to be enough. Just in the same way that it wasn’t enough for train companies to build better trains when Henry Ford’s new-fangled Model T car came to market. 

To be clear, building a better train is a not a bad option. Today, nearly a century on from when the last Model T rolled off the production line, trains still play a pivotal role. But for music, everything points to making streaming work better AND building something new.

Streaming fixed the problems of piracy and tumbling music sales. In doing so, it had the unintended consequence of commodifying music consumption. Without a new fork in the road, generative AI will simply hasten the utter domination of convenience. Pop will eat itself. AI will bring huge amount of value right across the music business, but portions of it will also hasten a reductive race to the bottom for convenient consumption.

Which is why, the time is now to start building plan B. To elevate a music world centred around fandom, identity, creativity, and exceptionalism. These are the fundamentally human elements of music that can (at least for now) clearly demarcate what is inevitably going to become a two-track music world. 

Five years ago, it would have been crazy to be thinking about how machines will shape the near future of both the business of music and of music itself. Just imagine what we might be discussing five years in the future?…..

Register For The 20th Annual IAMARegistration is now open for the 20th Annual IAMA (International Acoustic Music Awards), which provides an opportunity for acoustic artists everywhere to get prominent radio and web exposure and compete for awards in eight categories including Best Male Artist, Best Female Artist, Best Group/Duo Folk, Americana/Roots/AAA, Instrumental, Open (any musical style or genre), and Bluegrass/Country, as well as an Overall Grand Prize award worth over US$11,000.00, which includes radio promotion on over 250 radio stations in the U.S. and Canada.

Sponsored by New Music Weekly, Loggins Promotion, Airplay Access, Sirius XM Radio, Solid State Logic (SSL), Ditto Music, Acoustic Café Radio, Paige Capo, Make Music Matter, Kari Estrin Management & Consulting, and Sonicbids, IAMA has a history of winners getting signed and moving up the Billboard charts. Past awardees include Meghan Trainor, Zane Williams, Jeff Gutt, Charlie Dore, Bertie Higgins & Bellamy Brothers, Ryan Sheridan, Pat Byrne, and Deidre McCalla. Entry deadline is November 20, with details at: inacoustic.com/The post Register For The 20th Annual IAMA first appeared on Music Connection Magazine.

5 common Music Marketing MistakesA look at common music marketing mistakes and many misconceptions that are holding musicians and the people that help market them back. by CRISTINA CANO of CD Baby’s DIY Musicians. Continue reading
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5 free and affordable tools for independent musiciansThese five tools have been proven by users to be integral in a successful independent music career. Keep reading to see how they can help you. By Sara-Lena Probst of BlackbirdPunk. Continue reading
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Spotify tests AI playlist cover art toolSpotify is testing a tool that uses AI to enable users to create custom artwork for playlists on the streaming platform. Spotify’s new tool, AI Playlist Art, analyzes a playlist. Continue reading
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European Parliament working on music streaming market reportArtists' remuneration from music streaming expected to “dominate” the study, reports Politico
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Spotify sold music creation app Soundtrap back to its ownersSpotify has sold the music creation app Soundtrap back to its founders Per Emanuelsson and Bjorn Melinder a little more than 5 years after the streamer bought it for what. Continue reading
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Chartmetrics relaunches free OneSheet artist EPKsMusic data and analytics firm Chartmetric debuted it’s recently relaunched OneSheet program at the Music Biz in Nashville, after acquiring the startup last year. By David Benjamin De Cristofaro To create. Continue reading
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#Musicians: How to get the most out of your failuresSome failures may feel like setbacks when they can actually be the opposite. Here’s how to learn better from your mistakes for a more successful future. By Noa Kageyama, Ph.D. Continue reading
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How remixes can revive old tracksSome songs just need a few tweaks and a new beat to top the charts again. Bobby Owsinski of Music 3.0 looks at the phenomenon and how to take advantage. Continue reading
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Social platforms are becoming one-stop-shop for all entertainment [MIDiA]Social platforms are working to cover all the bases for all forms of entertainment. What does that mean for music and the music industry? by Hanna Kahlert of MIDiA Research Social. Continue reading
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Chartmetric relaunches free OneSheet EPKs for musiciansChartmetric has relaunched OneSheet, a simple-to-create, graphically pleasing, data-driven electronic promotional one-sheet for musicians. Chartmetric acquired the EPK startup last year. How One Sheet Works OneSheet automatically pulls stats from. Continue reading
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‘Irresponsible and offensive’: NMPA’s David Israelite does not like IMPALA’s new report on the ‘music streaming pie’. At all.Publishers' association chief calls report questioning slices of revenue pie "irresponsible and offensive"
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The global dance music industry grew by 34% in 2022Last week I was the International Music Summit in Ibiza, the annual music industry business event. This year MIDiA compiled the annual IMS Music Business Report and I presented the findings at the opening of the event. The full report is available here for download and you can view a video of the presentation here. Here are some of the key findings of the report.

The dance music industry has long been among the first music genres to be shaped by emerging technologies, not least because technology plays such an integral role in the production and performance of dance music. This has helped ensure that dance music has ridden the waves of music industry change. But it has also always been a genre built around performance, DJing especially. So when the pandemic came, dance music felt the impact particularly keenly, with festivals, clubs and bars all being hard hit. 2020 and 2021 were thus fallow years for dance music revenues, years in which DJs struggled to perform and the global industry looked much more towards its other revenue streams. With the global opening up of 2022, the dance music industry not only grew, but ended up bigger than pre-pandemic, pointing to the growing cultural reach and impact that dance music has in today’s global music business.

All of the key elements of the dance music business were up in 2022:

Recorded music up 11% to $1.5 billion

Publishing up 22% to $0.4 billion

Music hardware, software, sounds and services up 4% to $2.8 billion

Live up 78% to $4.5 billion

The result was that the total revenue of the global dance music industry rose 34% in 2022 to hit $10.2 billion. 

Hardware and software

Music hardware, software, sounds and services represents one of dance music’s super powers. Dance music producers have always relied on these tools, but now they are becoming the mainstay of the wider music creator economy. With music software used more across all genres, dance music sounds and techniques will influence all genres

Skills sharing and learning grew fastest, and it was worth $108 million in 2022. Plus, demand will increase still, due to fast evolving production techniques and new software

This will be a long-term growth area for dance music, with producers constantly seeking to upskill to the fast changing world of music production tech and techniques

Live

In live, Ibiza club ticketing revenue reached €124 million in 2022, up 55% from the €80 million registered in 2019. This was underpinned by increases in the number of events per venue, average ticket prices, and the total number of tickets sold going from 2 million in 2019 to 2.5 million in 2022

Globally, the top 100 DJs saw their 2022 bookings grow by around threefold on the pandemic hit 2021, though male DJs grew bookings more than half faster than their female counterparts. Female DJs represented 15% of all top 100 DJ bookings in 2022. Building popularity and getting bookings is a virtuous circle, but if female DJs are losing share of bookings to male counterparts, then the virtuous circle becomes a vicious circle.

A bright, diversified future

Finally, the dance music industry has shaken off the effects of the pandemic, coming out the other side, bigger, better, stronger and more relevant than ever. The pandemic shone a harsh light on the industry’s heavy-reliance on live. Now, that reliance is even higher because of live’s huge growth. There are two key differences from 2019: 1) a resurgent creator tools sector; and 2) a music publishing business that is finally beginning to find its share. The future is bright, with the rise of creator culture, bringing ever more people into dance music, both as fans and creators, with the creator-fan set to be at the centre of tomorrow’s dance music world.

Music, AI & the Metaverse ‘offer limitless possibilities’The potential for AI to disrupt music is the topic de jour, but add the Metaverse to the mix, and the possibilities become even more mind-boggling. Guest post by Eric. Continue reading
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