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Tuning in: Why the future looks bright for digital music services

By Mark Cranwell, LoveLive,

August 21, 2015 | 5 min read

Mark Cranwell, chief commercial officer at music media and technology company LoveLive, says the digital future looks bright for music.

Technology-driven disruption has transformed how people source and value music content. A fundamental shift from ownership to access means it is becoming less and less viable to make a living from record sales alone.

The good news, the industry is finally beginning to understand and adapt to this ‘new normal’, and technologydriven crisis is gradually turning into technology-driven opportunity.

The excellent news is that music has never been more accessible or popular. More people are accessing it in more ways than ever before. According to GroupM’s recent Next report, music is now the single most important medium in consumers’ lives – ahead of TV, reading, sport, film, and all the rest. Fans are expanding their tastes, too. The latest edition of Havas Sports & Entertainment’s Fans.Passions.Brands global study revealed that 56 per cent of people listen to at least 10 musical genres.

So far, so great – but so what? Well, just as the volume of music consumption is on the rise, so too are the means to target, reach and find fans via their biggest passion point. And not just for artists, but for wider industry stakeholders such as brands, platforms and media publishers too. By leveraging innovative digital technologies to deliver music fans what they want, and when, where and how they want it, whole new revenue opportunities can be opened up.

However, the changing behaviours and attitudes of the digital era music listener mean traditional business models no longer apply.

While highly passionate and engaged, today’s tech-savvy fan is accustomed to getting music content free of cost. So enhanced experiences, such as exclusive media or unique artist access, need to be provided before added value is perceived. That said, some fans will simply never pay while others just want more and more.

So whether you’re an artist, brand or media agency, taking a dataled approach to music consumer segmentation is vital in order to know who to target, and how, when and with what.

For example, ‘superfans’ have become the key focus for many. Similar to the touted ’50-quid man’ in years gone by, today’s ‘Superfans’ are responsible for 61 per cent of all music sales revenues. According to MIDiA Research, they also want more from their favourite artists and are willing to pay for the privilege: 45 per cent think music is more than just the song, that it is also the artist’s story and 18 per cent would pay for an interactive artist app.

This is a model Spotify, Apple Music and Tidal are all employing: a premium (paid for) subscriber acquisition strategy based on the provision of exclusive content and enhanced media experiences (ie video, editorial, direct artist access etc) for those willing to pay.

In the relatively untapped live arena too, fans who are already paying high prices for concert tickets are most likely to value digital media memories of the experience. GroupM’s Next research found that concertgoers attach an average value of $2.60 to an exclusive song download from a show they attended. Indeed, why couldn’t data be used to target fans attending certain events with the opportunity to purchase post-event exclusive video content?

Further highlighting the potential digital revenue opportunities in live, a Nielsen study in 2013 revealed that fans attending gigs would be willing to spend up to $2.6bn more annually for opportunities like behind-thescenes meet-and-greets with artists and exclusive content, while a recent Ticketfly poll indicated that close to a third (31 per cent) of 18-34 year olds stare at their phones for half the event or longer, and so would be open to in-event engagement.

The recent record-breaking 175,000 paid for live streams purchased online for The Grateful Dead’s five-night comeback concert series, shows that passionate fans of live don’t even have to be there to see value in certain experiences.

Whatever innovative new way we think of delivering added value to content and experience hungry music fans, we need to accept that the old models have changed. Nowadays, the songs themselves, in many ways, are just the first stage in the digital music ‘sales funnel’, attracting the listener, turning them into fans and pushing them onto more premium experiences.

While it is still early days, the digital future looks bright for music and filled with new exciting possibilities.

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