Stick or twist time – streaming’s innovation dilemmaAs Clayton Christensen identified in The Innovator’s Dilemma, there are two types of innovation: sustaining innovation and disruptive innovation. Sustaining innovation is what companies do to enhance existing business models, while disruptive innovation is typically driven by new entrants – insurgents looking to make markets by turning established ones upside down. Of course, if they are successful, eventually they switch to sustaining innovation, too. Streaming is now at the ‘you were the future once too’ stage. In the West at least, the focus is now firmly on optimisation.  This is all very sensible and absolutely the safe thing to do. However, music innovation must go beyond simply fine-tuning existing models. As it stands, streaming is perfectly poised for disruptors to come along and turn it upside down.

Sustaining innovation is how more growth will be extracted from streaming. Subscriber growth is slowing in the West. Because this is where majors have most market share (MIDiA’s “State of the independent music economy” report found that majors’ market share in ‘Rest of World’ is just 31%) and most revenue, it is where they are focusing their optimisation efforts. Thus far, this innovation has taken the form of streaming price increases, two tier licensing, and the forthcoming superfan tier (per TechCrunch). Of course, you could make a case that a superfan tier is disruptive innovation, but that will depend upon whether it really pushes the boundaries of what streaming is. Otherwise, it may only be as ‘disruptive’ as mobile carriers having premium plans for higher spending consumers.Type of innovation notwithstanding, these sustaining innovations all give music rightsholders (bigger ones especially) a route to more revenue per user. This is optimisation. However, in a streaming value chain where a finite pot of money gets divided among constituents competing for share, optimisation can go both ways. 

Take a look at things from Spotify’s perspective. Perennially under pressure from shareholders to improve margin, Spotify has neatly implemented four, margin improving, sustaining innovations:

Discovery mode which can give Spotify around 15% additional share (per Billboard)

Fraud fines issued to labels and distributors effectively means Spotify retains more revenue

Spotify’s “modernised” two-tier licensing means a big chunk of songs will not be paid royalties.If Spotify retains just a small portion of that, it is more margin. Even if Spotify gets to keep $0.00, two-tier licensing and anti-fraud measures will disincentivise the longtail, which will mean a slowdown in the number of low-revenue bearing tracks. This in turn will slow the rocketing of hosting fees, which means easing margin pressure

The infamous audio books bundle sees less share going to music rightsholders, which in turn could (depending on book rightsholder payments) also mean more share to Spotify (per Variety)

On top of all this, Spotify has two mid-to-long term accelerators:

1.    Spotify is growing its userbase in Global South markets, meaning it does not face the same growth slowdown concerns as its Western rightsholder partners

2.    By building creator networks in non-music formats, it has a path to higher margin content

Herein lies the problem with sustaining innovation: when it means optimising at the expense of other members of the value chain, one person’s optimisation can be another’s de-optimisation.

Appetite for disruption

Sustaining innovation is so appealing because it brings the promise of low-risk growth.  However, little new is ever built without risk. Streaming was risky once, too. In fact, back in 2010 it seriously looked like Spotify might have to launch in the US without the major labels (per The Guardian).

There are many ways in which the streaming model can be seriously innovated but thus far, caution has held that back. China’s streaming services show just how radically the user experience can be changed, but rather than innovating upwards, Western DSPs have had to innovate sideways, into new audio formats (Amazon Music Unlimited’s Audible integration is the latest case in point).

Sometimes you need to disrupt yourself before someone else does. Facebook is the textbook example. In 2012 it was still the dominant global social network, but a small photo sharing app named Instagram was beginning to gain momentum. Facebook bought it for, what at the time looked like a staggering $1 billion (per The New York Times). Swiftly adding WhatsApp and Messenger, Facebook pivoted towards mobile photo and video sharing. Nowadays, this is what we understand social media to be. Back then it looked like a different planet compared to the desktop world Facebook occupied. When you do it right, turning disruptive innovation in on yourself pays dividends.

Party like it’s 1999 – a little warning from history

In the late 1990s the CD reigned supreme. Annual growth was not as stellar as it had been earlier in the decade, but it was still holding its own, mainly because the record labels had hit upon a new growth strategy: price increases. There was no clear new format. The CD was both today’s format and tomorrow’s. The outlook was steady with   unremarkable growth underpinned by price increases. Sound familiar?

But that is not all, look at the spookily similar growth trends in the ‘growth through pricing’ phases of the CD and streaming:

To be clear, there is as much correlation as there is causality here. 2024 will almost certainly be a positive growth year, but the similarities are still important. In the late ‘90s, repeated price increases created the fertile breeding ground for peer-to-peer (P2P) piracy. It took a decade and a half for the music industry to really start to monetise the digital lane P2P had opened. Social music is at least somewhat monetised now, but still dramatically less so than streaming. The danger of optimisation pushing more consumers and creators to social is a real and present one. As MIDiA’s “Bifurcation theory” posits: social will not kill off streaming like P2P did the CD, instead it will coexist, but only as long as – you guessed it – streaming innovates.

Also, this time around, the labels are much better prepared for managing change. Label short-sightedness gave piracy a helping hand, as The Guardian’s Dorian Lynskey puts it: “‘90s executives were too busy worrying about the next quarter to consider the next decade”. Nowadays, labels spend a lot of time, resource and energy thinking about long-term strategy, as recently evidenced by UMG’s Capital Markets Day.

However, prepared or not, the streaming side of the music business needs to think hard about whether sustaining innovation is enough. To be blunt, if streaming doesn’t disrupt itself, social will.

LAST DAY for Spotify Wrapped Updates: Musicians Get Ready!Today, Wednesday November 20 is the last day for Spotify Wrapped updates by musicians who want to make the most of Spotify Wrapped 2024.
The post LAST DAY for Spotify Wrapped Updates: Musicians Get Ready! appeared first on Hypebot.

Hangout: Social Music platform debuts with Major Labels, group listeningHangout social music platform offers a new way for music fans and artists to connect online. Explore its unique features and how it could reshape the social music experience.
The post Hangout: Social Music platform debuts with Major Labels, group listening appeared first on Hypebot.

Token Economy for Musicians: Monetize a fanbase with $AMPSThere are dozens of startups creating new and better ways for artists to connect with a monetize fans Learn how $AMPS is creating a token economy for musicians to connect with and monetize fans while retaining control of the data.
The post Token Economy for Musicians: Monetize a fanbase with $AMPS appeared first on Hypebot.

Daniel Ek cashes out Spotify shares for the fifth time in 18 monthsDaniel Ek, among other top stockholder executives, have cashed out some of their shares in Spotify after share prices in the streaming service skyrocketed.

READ MORE: No, Daniel Ek, the music industry isn’t like professional football

The streaming service confirmed it had “never been in a stronger position” when it published its Q3 earnings for 2024 last week, with its subscriber and user growth continuing to climb.
As a result, Spotify’s stock price jumped on the New York stock exchange, closing at an all-time high of $477.50 on November 14.
It’s therefore not a surprise that various Spotify executives have cashing out portions of their shares. According to an SEC filing seen by Music Business Worldwide, Ek sold 75,000 Spotify shares on November 15, letting him cash out $35.8 million.
Image: Jonathan Raa / NurPhoto via Getty
Indeed, Ek has cashed out some of his Spotify stock five times in the past 18 months. Altogether, he’s cashed out around $376.3 million worth of Spotify shares since last summer.
Meanwhile, Rosello Company Ltd, the Cyprus-registered holding company owned by Almatea, a Luxembourg-based firm whose sole shareholder is Spotify co-founder Martin Lorentzon, sold 959,762 shares of SPOT worth $383.75 million.
According to the streamer’s Q4 forecast, it looks set to complete its first full year of profitability. It grew its monthly active users by 11 percent across Q3 to 640 million, while its subscriber base increasing by 12 per cent to 252 million. Total revenue was up across the quarter by 19 percent year-over-year to €4 billion, with its gross margin reaching 31.1 percent.
When the results were published Ek said: “I’m incredibly proud of the way we’ve delivered and the progress we’ve made. We’re where we set out to be – if not a little further – and on a steady path toward achieving our long-term goals. This relentless pursuit of innovation and commitment to growth sets us up to deliver the most valuable user experience in the industry, while reinforcing the core strengths that make Spotify unique. I am very excited about what lies ahead for us.”
The post Daniel Ek cashes out Spotify shares for the fifth time in 18 months appeared first on MusicTech.

Warm Audio unveil new WA76 Series Warm Audio have announced the launch of a new range of outboard compressors that have been designed to deliver the sound of two sought-after versions of the iconic 1176.

Ramera Abraham to host masterclass at Miloco Gear 2024 Miloco have announced that the Miloco Gear 2024 Pro Audio Showcase will feature a masterclass delivered by vocal producer and recording engineer Ramera Abraham.

Schwabe Digital release Gold Clip Pack update Schwabe Digital have announced that their popular Gold Clip plug-in will now be known as Gold Clip Pack, and will include a new, free add-on plug-in called Gold Clip Track.

More music is released in a day in 2024 than in all of 1989 combinedIf you think that there’s too much music coming out and not enough time to listen to it all, it turns out that’s not an illusion. A new report has found that more music is released in a single day now than in the entirety of 1989.

READ MORE: “It’s a dangerous job to be a young artist”: Skrillex shares sentiments on the music industry and plans for new music in 2025

The finding was confirmed in the MusicRadar report by music business economist Will Page, the former Chief Economist of Spotify.
“More music is being released today (in a single day) than was released in the calendar year of 1989,” Page explains. “More of that music is being done by artists themselves, meaning there’s even more demand for music production software.”
While this finding does put into perspective just how saturated the musical climate is nowadays, it’s perhaps not surprising given how much music has been democratised  in recent years thanks to technological progress. It’s easier than ever to make and share high quality music from your bedroom, even without label backing, and it’s also brought down the cost – and subsequently, the industry’s barriers to entry.
According to the MIDiA’s “State of the Music Creator Economy” report, there were 75.9 million global music creators in 2023, which increased 12 per cent from 2022.  By 2030, that number is predicted to hit 198.2 million.
This might be great for consumers with infinite choice of what to listen to for minimal cost on streaming services, but it’s consequently harder for artists to stand out. Money remains an issue thanks to the miniscule payments streaming services make and the rising cost of music-making as more and more software, plugins, and other tools switch to subscription-based models. The effect, according to the report, is that “fatigue and resentment [is] on the rise.”
According to MIDiA, “a quarter of software, sound, and services revenues” in 2022 came from subscriptions, which is expected to increase to one-third by 2030.
“Software companies have followed the lead set by Wall Street. Recurring revenue is very sexy right now,” says  Steve Heithecker of Pyramind Institute in the report. People often also forget they have the subs and then it’s a bit like free money for these companies when they auto renew.”
The post More music is released in a day in 2024 than in all of 1989 combined appeared first on MusicTech.

Stephen Pearcy Discusses 40th Anniversary Reissue of Ratt's Out of the CellarStephen Pearcy Discusses 40th Anniversary Reissue of Ratt's Out of the Cellar, the Musical Importance of 1984, and Why the Surviving Ratt Members Haven't Reunited Recently.

Donald Trump taps crypto advocate Lutnick as commerce secretaryThe future commerce secretary is a billionaire whose Wall Street firm has ties to Tether.

Win $1,000 and get your song pitched to K-pop artists by MNDR, Margo XS, and Jess Corazza
We're excited to announce that we're partnering with MNDR, We Make Noise, and Soundtoys for our latest K-pop challenge.

PSA: You shouldn’t upload your medical images to AI chatbotsSecurity and privacy advocates have long warned that sensitive medical data can be used to train AI models, and can expose personal data down the line.
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Raspberry Pi Compute Module 5 Seen in the WildLast Thursday we were at Electronica, which is billed as the world’s largest electronics trade show, and it probably is! It fills up twenty airplane-hangar-sized halls in Munich, and only takes place every two years.
And what did we see on the wall in the Raspberry Pi department? One of the relatively new AI-enabled cameras running a real-time pose estimation demo, powered by nothing less than a brand-new Raspberry Pi Compute Module 5. And it seemed happy to be running without a heatsink, but we don’t know how much load it was put under – most of the AI processing is done in the camera module.
We haven’t heard anything about the CM5 yet from the Raspberry folks, but we can’t imagine there’s all that much to say except that they’re getting ready to start production soon. The test board looks very similar to the RP4 CM demo board, so we imagine that the footprint hasn’t changed. If you look really carefully, this one seems to have mouse bites on it that haven’t been ground off, so we’re speculating that this is still a pre-production unit, but feel free to generate wild rumors in the comment section.
The CM4 was a real change for the compute module series, coming with a brand-new pinout that enabled them to break out more PCIe lanes. Despite the special connectors, it wasn’t all that hard to work with if you’re dedicated. So if you need more computing power in that smaller form factor, we’re guessing that you won’t have to wait all that much longer!
Thanks [kuro] for the tip, and for walking around Electronica with me.

A model of virtuosityA crowd gathered at the MIT Media Lab in September for a concert by musician Jordan Rudess and two collaborators. One of them, violinist and vocalist Camilla Bäckman, has performed with Rudess before. The other — an artificial intelligence model informally dubbed the jam_bot, which Rudess developed with an MIT team over the preceding several months — was making its public debut as a work in progress.Throughout the show, Rudess and Bäckman exchanged the signals and smiles of experienced musicians finding a groove together. Rudess’ interactions with the jam_bot suggested a different and unfamiliar kind of exchange. During one duet inspired by Bach, Rudess alternated between playing a few measures and allowing the AI to continue the music in a similar baroque style. Each time the model took its turn, a range of expressions moved across Rudess’ face: bemusement, concentration, curiosity. At the end of the piece, Rudess admitted to the audience, “That is a combination of a whole lot of fun and really, really challenging.”Rudess is an acclaimed keyboardist — the best of all time, according to one Music Radar magazine poll — known for his work with the platinum-selling, Grammy-winning progressive metal band Dream Theater, which embarks this fall on a 40th anniversary tour. He is also a solo artist whose latest album, “Permission to Fly,” was released on Sept. 6; an educator who shares his skills through detailed online tutorials; and the founder of software company Wizdom Music. His work combines a rigorous classical foundation (he began his piano studies at The Juilliard School at age 9) with a genius for improvisation and an appetite for experimentation.Last spring, Rudess became a visiting artist with the MIT Center for Art, Science and Technology (CAST), collaborating with the MIT Media Lab’s Responsive Environments research group on the creation of new AI-powered music technology. Rudess’ main collaborators in the enterprise are Media Lab graduate students Lancelot Blanchard, who researches musical applications of generative AI (informed by his own studies in classical piano), and Perry Naseck, an artist and engineer specializing in interactive, kinetic, light- and time-based media. Overseeing the project is Professor Joseph Paradiso, head of the Responsive Environments group and a longtime Rudess fan. Paradiso arrived at the Media Lab in 1994 with a CV in physics and engineering and a sideline designing and building synthesizers to explore his avant-garde musical tastes. His group has a tradition of investigating musical frontiers through novel user interfaces, sensor networks, and unconventional datasets.The researchers set out to develop a machine learning model channeling Rudess’ distinctive musical style and technique. In a paper published online by MIT Press in September, co-authored with MIT music technology professor Eran Egozy, they articulate their vision for what they call “symbiotic virtuosity:” for human and computer to duet in real-time, learning from each duet they perform together, and making performance-worthy new music in front of a live audience.Rudess contributed the data on which Blanchard trained the AI model. Rudess also provided continuous testing and feedback, while Naseck experimented with ways of visualizing the technology for the audience.“Audiences are used to seeing lighting, graphics, and scenic elements at many concerts, so we needed a platform to allow the AI to build its own relationship with the audience,” Naseck says. In early demos, this took the form of a sculptural installation with illumination that shifted each time the AI changed chords. During the concert on Sept. 21, a grid of petal-shaped panels mounted behind Rudess came to life through choreography based on the activity and future generation of the AI model.“If you see jazz musicians make eye contact and nod at each other, that gives anticipation to the audience of what’s going to happen,” says Naseck. “The AI is effectively generating sheet music and then playing it. How do we show what’s coming next and communicate that?”Naseck designed and programmed the structure from scratch at the Media Lab with assistance from Brian Mayton (mechanical design) and Carlo Mandolini (fabrication), drawing some of its movements from an experimental machine learning model developed by visiting student Madhav Lavakare that maps music to points moving in space. With the ability to spin and tilt its petals at speeds ranging from subtle to dramatic, the kinetic sculpture distinguished the AI’s contributions during the concert from those of the human performers, while conveying the emotion and energy of its output: swaying gently when Rudess took the lead, for example, or furling and unfurling like a blossom as the AI model generated stately chords for an improvised adagio. The latter was one of Naseck’s favorite moments of the show.“At the end, Jordan and Camilla left the stage and allowed the AI to fully explore its own direction,” he recalls. “The sculpture made this moment very powerful — it allowed the stage to remain animated and intensified the grandiose nature of the chords the AI played. The audience was clearly captivated by this part, sitting at the edges of their seats.”“The goal is to create a musical visual experience,” says Rudess, “to show what’s possible and to up the game.”Musical futuresAs the starting point for his model, Blanchard used a music transformer, an open-source neural network architecture developed by MIT Assistant Professor Anna Huang SM ’08, who joined the MIT faculty in September.“Music transformers work in a similar way as large language models,” Blanchard explains. “The same way that ChatGPT would generate the most probable next word, the model we have would predict the most probable next notes.”Blanchard fine-tuned the model using Rudess’ own playing of elements from bass lines to chords to melodies, variations of which Rudess recorded in his New York studio. Along the way, Blanchard ensured the AI would be nimble enough to respond in real-time to Rudess’ improvisations.“We reframed the project,” says Blanchard, “in terms of musical futures that were hypothesized by the model and that were only being realized at the moment based on what Jordan was deciding.”As Rudess puts it: “How can the AI respond — how can I have a dialogue with it? That’s the cutting-edge part of what we’re doing.”Another priority emerged: “In the field of generative AI and music, you hear about startups like Suno or Udio that are able to generate music based on text prompts. Those are very interesting, but they lack controllability,” says Blanchard. “It was important for Jordan to be able to anticipate what was going to happen. If he could see the AI was going to make a decision he didn’t want, he could restart the generation or have a kill switch so that he can take control again.”In addition to giving Rudess a screen previewing the musical decisions of the model, Blanchard built in different modalities the musician could activate as he plays — prompting the AI to generate chords or lead melodies, for example, or initiating a call-and-response pattern.“Jordan is the mastermind of everything that’s happening,” he says.What would Jordan doThough the residency has wrapped up, the collaborators see many paths for continuing the research. For example, Naseck would like to experiment with more ways Rudess could interact directly with his installation, through features like capacitive sensing. “We hope in the future we’ll be able to work with more of his subtle motions and posture,” Naseck says.While the MIT collaboration focused on how Rudess can use the tool to augment his own performances, it’s easy to imagine other applications. Paradiso recalls an early encounter with the tech: “I played a chord sequence, and Jordan’s model was generating the leads. It was like having a musical ‘bee’ of Jordan Rudess buzzing around the melodic foundation I was laying down, doing something like Jordan would do, but subject to the simple progression I was playing,” he recalls, his face echoing the delight he felt at the time. “You're going to see AI plugins for your favorite musician that you can bring into your own compositions, with some knobs that let you control the particulars,” he posits. “It’s that kind of world we’re opening up with this.”Rudess is also keen to explore educational uses. Because the samples he recorded to train the model were similar to ear-training exercises he’s used with students, he thinks the model itself could someday be used for teaching. “This work has legs beyond just entertainment value,” he says.The foray into artificial intelligence is a natural progression for Rudess’ interest in music technology. “This is the next step,” he believes. When he discusses the work with fellow musicians, however, his enthusiasm for AI often meets with resistance. “I can have sympathy or compassion for a musician who feels threatened, I totally get that,” he allows. “But my mission is to be one of the people who moves this technology toward positive things.”“At the Media Lab, it’s so important to think about how AI and humans come together for the benefit of all,” says Paradiso. “How is AI going to lift us all up? Ideally it will do what so many technologies have done — bring us into another vista where we’re more enabled.”“Jordan is ahead of the pack,” Paradiso adds. “Once it’s established with him, people will follow.”Jamming with MITThe Media Lab first landed on Rudess’ radar before his residency because he wanted to try out the Knitted Keyboard created by another member of Responsive Environments, textile researcher Irmandy Wickasono PhD ’24. From that moment on, “It's been a discovery for me, learning about the cool things that are going on at MIT in the music world,” Rudess says.During two visits to Cambridge last spring (assisted by his wife, theater and music producer Danielle Rudess), Rudess reviewed final projects in Paradiso’s course on electronic music controllers, the syllabus for which included videos of his own past performances. He brought a new gesture-driven synthesizer called Osmose to a class on interactive music systems taught by Egozy, whose credits include the co-creation of the video game “Guitar Hero.” Rudess also provided tips on improvisation to a composition class; played GeoShred, a touchscreen musical instrument he co-created with Stanford University researchers, with student musicians in the MIT Laptop Ensemble and Arts Scholars program; and experienced immersive audio in the MIT Spatial Sound Lab. During his most recent trip to campus in September, he taught a masterclass for pianists in MIT’s Emerson/Harris Program, which provides a total of 67 scholars and fellows with support for conservatory-level musical instruction.“I get a kind of rush whenever I come to the university,” Rudess says. “I feel the sense that, wow, all of my musical ideas and inspiration and interests have come together in this really cool way.”