9 things we can expect to see in the music industry in 2018
- Spotify will go public
After years of speculation about the timing, finally, the cat is out of the bag: Spotify will file for listing on the New York Stock Exchange (NYSE) in the first quarter of this year. While the streaming giant is said to be valued at around $19 billion, the listing will be direct, meaning that no new stock is issued and therefore no money raised.
Check out this article on Pitchfork to read more about how going public could change the service.
- Streaming and telecom coops will become a thing again
Due to the recent changes in net neutrality, just like in the beginning days of streaming, streaming services might start cooperating with telecoms again. Why? Users will soon have to pay additional fees for high large data consumption. In order to avoid this, streaming services might partner again with telecoms to offer special bundling deals to consumers. These concepts have worked very well in the past for both parties, so they might just repeat it.
- Facebook will enter the music market and grow into a threat for YouTube and Spotify
Just recently, Facebook announced its licensing deal with Universal Music. While, in the first step, this is said to mainly encourage content creators to use music and to compensate artists, it is likely that Facebook will make a serious move into the audio and video streaming market. Artists will soon upload their full-length music videos directly on Facebook and profit from its network effects. In the longer run, Facebook might launch an audio streaming service as well. This could be a serious competition for YouTube and Spotify since both rely heavily on social interaction as well. Labels would actually profit from this as this would mean decreasing buyer power.
Read more on Techcrunch.
- Fragmentation and Windowing will die
This is more a personal hope than a prediction. While exclusive releases and windowing might be working in the TV/movie market, it will most certainly not in music and instead drive users back to illegal consumption. Heavy users were once defined as consumers spending $90+/year on music (including live and merchandising). Now, users often pay even more than this amount on their yearly streaming subscription only, so why punish them by releasing exclusively on Tidal or weeks after the initial release (recent examples of artists pursuing this strategy include Jay Z, Adele, and Taylor Swift)? The industry’s problem in the past has been that it was not able to provide legal and user-friendly solutions. So, please stop doing this!
- Streaming services will try to differentiate through content creation
Since windowing strategies and exclusive releases have (luckily) almost died out (see previous point), it is becoming hard for streaming services to find relevant differentiators. This is why we have seen some efforts to create unique content, such as “Spotify Singles”, Apple’s Carpool Karaoke and so on. The problem: the users don’t care about this content. While it is a nice add-on, there’s already so much good and free content on YouTube and other social media platforms that there’s no differentiating benefit. Instead, users care about tailored curation and discovering new songs, which is why Spotify with “Discover Weekly” and “Release Radar” is far ahead of everyone else.
- The new 360
Approximately a decade ago, 360 deals were said to be the future of record labels, meaning that labels did not only get the recording rights but also rights to merchandising, publishing, and live performances. Today’s social media offers something much more valuable: the commercialization of artist channels. While product placement in music videos is nothing new, there is giant potential to do brand coops on other social media channels, especially Instagram. After all, labels have invested great amounts in building those channels, so now is the time to monetize them instead of only using them for promotion.
- Streaming will influence songwriting
Most of a songs streams come through playlists, rather than direct plays. In order to perform well here and receive a good seeding by the curators, there are different metrics to optimize, one of these being the skip rate. There are a few easy tweaks that can be done in order to improve this, such as minimizing intros. No, I’m not saying that artists should give up their art and solely optimize what works best in theory, but just as there are radio edits, why not make streaming edits for the main singles? Additionally, collaborations will increase as they support the discovery and boost the monthly plays of all participating artists.
- Startups will be focusing on data-driven talent discovery
So far, no one has yet found the magic formula of how to discover a hit. Startups aggregate all available data from all platforms, but there seems to be something more. Other things that startups are focusing on is the artificial creation of music and the process optimization of licensing through the use of blockchain technology. Check out this article from Harvard Business Review for more on this topic.
- The number of song releases will further grow
Over the past few years already, major labels, as well as independent players have heavily increased the number of releases. I believe that this trend will go on and lead into a self-selection through streaming performance. As a consequence, upfront investments and advancements will decrease. This means while the barriers to release will fully diminish, it will become very hard for newcomers to gain visibility.
Common predictions that I believe will (still) not happen this year:
- Radio will die
- The album format will die
- Labels will stop investing in TV, radio and classical media — if you want it or not, this still contributes to the success of hit singles.