Technology can’t save us: why the music industry needs real innovation

Few industries have undergone such rapid disruption as the music business. A quick look at the past two decades offers no shortage of case studies in how changes in technology and consumer attitudes have conspired to transform a billion-dollar industry with alarming speed. But where does innovation come from, and how do we make more of it — indeed, why should we be encouraging innovation in the music industry at all?

Just for fun, let’s name a few of the things that have provoked massive change for the music industry: compact discs, mp3s, iPod, high-speed internet connectivity, peer-to-peer file sharing, social networking (MySpace, anyone?), accessible studio software and DAWs, streaming technologies (from RealPlayer to Napster to YouTube to Pandora to Spotify and on). This list only scratches the surface.

Looking back on this history, one can make at least two broad observations.

First, the relationship that consumers have to music has been irrevocably altered. In the 90s and early oughts, music made its way from stacked plastic cases in your living room to a hard drive in your pocket, organized by artist, album and genre. With the rise of streaming, the very idea of owning an album seems quaint. Just search and listen, or pick a playlist to suit your current mood and down it comes from the cloud to your headphones or any number of streaming devices. You might not even look down to see the name of the artist. (“Who are we listening to?” “Oh, this? It’s my latest weekly playlist.”) It’s very difficult to move backwards from that because our culture has shifted, and culture tends to be self-reinforcing.

Second, the market for music has gone from being a largely centralized one of a few major record labels owning the relationships between artists and audiences, to a more decentralized one where audiences can interact with artists through a wide variety of channels, media and businesses. Major labels still play a major role, but when acts like Radiohead can also self-release an album under a pay-what-you-can model and make more money that way, you know the universe is changing. Lately, people are talking about how bitcoin and blockchain could further reduce frictions in the market between artist and listener and some are already predicting a return to a fully decentralized patronage model enabled by automated, instant microtransactions.

Others who are better informed than me might point out other seismic shifts in the business of music, but I’ll leave it at those two, because the point is this: to say that technology has been at the heart of these changes is not the story — it’s not even the headline. Technology has enabled shifts in culture and consumption, but businesses and consumers have played necessary roles by promoting the adoption of those technologies because they served some other purpose: cultural, economic, or social. For example, communities of music makers have flocked to online forums and social networks to share, learn, connect and ultimately support each other: a social purpose. Consumers embraced mp3s not because they sounded better or worse, but because they offered economic benefits and utility (e.g. reduced opportunity costs) which were recognized and supported by businesses.

The point is this: real, lasting and important change in the music industry has occurred where some new approach has created real value in the market for music by lowering costs (of production, consumption, distribution, personal acquisition) or by raising willingness to pay (e.g. for unique listener-to-artist experiences, the removal of middlemen in the market, and so forth). There is usually a technological component, but it’s supported by behavioural and economic forces. That’s innovation.

So, how do we stimulate more innovation? And actually, should we? Let’s deal with the second question first.

It’s not true that the innovation we’ve seen in the music industry has benefited everyone equally. Peer-to-peer file sharing created an alternative to purchasing music, which hurt some market players and helped others (i.e. the so-called ‘buyers’ in the market). But that’s not the technology’s fault — it’s how people used it. Websites and streaming services have created alternative distribution channels for artists to get their music out there without the help of a traditional label. But those channels aren’t as universally adopted by fans, and it could be argued that migration could be leaving some deserving behind. Again, that’s not the technology’s fault. And there’s debate over whether the payment models of the big streaming services is actually fair to all artists. Again, not the technology’s fault: it’s the businesses that are built around it. We need more innovation because the industry is never going to be perfect and it can only be better if new entrants come to the market with products and services that offer unique value to some or all of the market players. So, yes: bring on the innovation.

Now, how to stimulate innovation? By designing new technologies and ways of doing business that take into account the needs of stakeholders.

Innovation is not (just) about technology. Innovation happens when technology is integrated into business models (of artists, distributors, labels and producers) and/or adopted by consumers. Where there is no adoption, there is no innovation.

Innovation isn’t likely to come about by burning the music industry as we know it down to the ground and building a new one using bitcoin-enabled streaming. Even if that were possible, some or many might mourn the loss of the major labels — as someone keeps reminding me, the A&R machine is what brought us The Beatles as we know them. Innovation is about finding new and usable ways to better serve artists, organizations, consumers in their missions to profit, create, share and enjoy.

That’s why FCAD is launching the Music Den. We believe that by bringing aspiring innovators together with industry experts — including representatives of Canadian music businesses from largest to small, academics, futurists, technologists and content creators — we will infuse technical brilliance and/or budding business acumen with deep insights into how artists, consumers and businesses operate (now and in the future). We are looking for entrepreneurs, programmers, designers, managers and promoters who want to be a part of fundamentally changing how the music industry operates in Canada. Together, we will see how far innovation can go. Join us.

The Music Den at the Transmedia Zone at Ryerson University launches on April 27, 2016.

Brendan is the Director, Strategic Planning for the Faculty of Communication and Design (FCAD) at Ryerson University, an electronic music producer/composer and former technology entrepreneur.