The Sharing Economy is NOT Big. Part 4. Music, Mass Media & Communications

Tala
Tala
Oct 6, 2016 · 6 min read

Access Economy & Disintermediation: Music & Mass Media

Music is now part of the sharing economy because most of it is streamed, and streaming is access vs. ownership. In the case of music, the record companies have been disintermediated.

We went from owning CD’s, and having to buy an entire album, to Napster to being able to buy a single song. The iTunes store made it possible to buy individual songs. From ITunes to Spotify where there is zero ownership and you can stream anything. Of course media is more than music but here I’ll use the music industry as a proxy for all mass media even though there are differences in how TV, newspapers, radio and movies have been affected by software.

Napster changed the entertainment industry forever. The peer to peer file sharing service allowed anyone on the network to download music onto their computers. Seventy million people got used to the idea of getting music for free. This put downward pressure on the price for music and started a chain reaction that disrupted the entertainment industry irrecoverably.

Impact:

For impact lest’s consider that after the death of Napster, iTunes dominated the music industry. Streaming is now the preferred method of listening to music. Now it’s Spotify, Pandora, and Youtube, not Capital, Atlantic, or Warner Music Group. In the decade since peer-to-peer (p2p) file-sharing site Napster emerged in 1999, music sales in the U.S. have dropped 47 percent, from $14.6 billion to $7.7 billion. The numbers look equally bleak for newspapers, broadcast television, radio and movie rentals.

The shift is generational. The 16–24 age group prefers their smartphones over other devices like laptops and desktops. They listen to very little radio, watch very little TV and have a completely negligible relationship with print media. Millennials and generation Z are 45% of the population in the States and their media behaviors are completely different from all other age groups.

They spend much more time on mobile, specifically on mobile apps. By 2030 more than 55% of media will be consumed on a mobile device according to a Business Insider report. Streaming video subscriptions are climbing. So are paid music subscriptions. Even digital print subscriptions are climbing fast. Native digital ads, and freemium models are thriving. But subscriptions is now the preferred media monetization method.

Future:

Music sites need to tackle licensing if they want to stay relevant. Some people propose that fans subscribe directly to their favorite artists through a service like Patreon. Bandcamp also works on this model. A top Patreon creator brings in almost $100,000 per month. Though this is far from what Michael Jackson made when he was on Epic/Columbia Records, in time it will probably grow and more long tail content will be streamed this way.

Potential new angles for music include immersive experiences. There’s a startup called SubPac that makes a wearable vest and backpack that makes you ‘feel’ the sound instead of just listening to it. They’ve partnered with Timbaland. This approach matched with AR or VR has potential for new musical experiences.

Spotify, Pandora and Rhapsody have all been struggling with revenue. While Youtube has been allowing people to stream music for free. They also have not made a profit even though they have growing revenues and user bases. But Spotify, the clear leader in this space hasn’t turned a profit even though they’ve been operational for a decade. In fact, only one streaming service is in the black and that’s Napster. It’s revenue are much smaller than Spotify’s but it is a profitable business. This is partially because they don’t have a free, add-supported level, which is usualy a huge cost center. It is possible that in time the numbers may change. , but for now the music industry will continue to see experiments until it finds a profitable revenue model.

Disintermediation: Communications

The early messaging apps, BBM and AIM Chat were the forerunners of modern messaging. And then VoIP was invented. When this protocol migrated from desktop to mobile, increasing the availability of free calls, the traditional voice telephony market went into a freefall.

Messaging and communications apps like Skype and Whatsapp are not just enablers of the sharing economy. They are a part of it. What messaging and communication apps have disintermediated are the Telecom companies like AT&T that used to exist by charging people to make phone calls. They also democratize the means to communicate, by making it many times cheaper to have a conversation.

One of the bedrocks of the open internet is open communications. Information should be accessible, shared and open. It must be easy to find. Communications and social media platforms enable this.

Talking and working together in person is the oldest form of collaboration. Platforms like WhatsApp, Viber and Slack digitize this experience.

Impact:

As mobile grew in popularity the innovation of messaging took off. “Chat has become on mobile what email has been to the desktop web — the primary way we communicate.” Mobile chat has now surpassed social media in terms of MAUs.

We‘ve become so used to them that we forget how much easier and cheaper it is to communicate around the globe. There was a time when the only way to have a real-time conversation with someone across the world was to pay for expensive long distance phone calls.

Messaging and chatting apps are growing in popularity and are part of the reason why communications platforms are so successful. These platforms are a perfect example of the network effect. The service becomes more valuable with every new user. Every new user increases the number of people who want to join.

Whatsapp alone has over a billion users, and if we combine the numbers of the top four messaging apps we get about 2,9 billion people, 400,000,000 more people than on the top four social media sites.

Future:

Conversational commerce is going to grow as Facebook continues to deploy services for businesses to communicate with their customers. Companies like Hyatt, Uber, Spring and KLM have already started using Facebook’s Messenger commercially.

The integration of payments into messaging is going to expand as Google, Apple, WhatsApp and Facebook experiment or launch products in this space.

For the record, not all conversational commerce happens on messaging platforms. Services like Amazon’s Echo, Operator, Siri & AppleTV and Magic are all services that fit the description too.

Security will continue to be an important feature for many users. Mark Zuckerburg once said that privacy was no longer a social norm. But on March 6th of 2019, he published “A Privacy-Focused Vision for Social Networking” on the Facebook blog. In the first paragraph, he says…

In this note, I’ll outline our vision and principles around building a privacy-focused messaging and social networking platform.

This is a surprising about-face, but understandable given the mounting pressure for more privacy coming from regulators and international governments.

WeChat is now the most innovative messaging app on the planet. It’s combination of in-App purchases, it’s payment system TenPay, and the financial services they offer that blur the lines between e-commerce and banking are some of the ways the service monetizes. Add their o2o (online to offline) marketing efforts and advertising to the mix and you get a very unique combination of revenue streams. Here’s an incomplete list of things you can do on WeChat.

  • Get a cab
  • Order food
  • Purchase movie tickets
  • Order shoes from Nike
  • Send an order to your local Starbucks
  • Buy Burberry
  • Meet new people in your area
  • Book a Dr’s appointment
  • Pay your water bill

WeChat’s official accounts are designed to give businesses a presence on the platform. The service accounts, in particular, allow a business to take payments. With 83% of the users on the platform actively buying things, it’s safe to assume that earnings from WeChat make up a healthy percentage of Tencent’s strong quarterly showings.

WeChat is also an e-commerce platform because of its rich API functionality for business accounts. Businesses can send messages to their customers, set up e-commerce stores, and sell products through chat.

We will see Facebook try to emulate their success at turning messaging platforms into commerce platforms.

ADD DISCORD.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade