Music Industry, an infinite Journey:
Part III – The Future

stop (cc)

Downloads

What about downloads, how will they perform by 2020 ? Pretty badly. They will be gone for good. Let’s be real: nobody care about owning a digital file. Now that streaming platforms enable to store songs locally, there is absolutely no reason for downloads to survive except as a sub-functionality of streaming. The brutality of download sales drops faced since iTunes started its streaming service – about 25% versus one year ago – definitely sustain this destiny.

Radios

With a catalog of 30 million songs available 24/7, the relevance of radios is doubted. We still need to keep in mind that in a streaming model, we still have to select what we want to listen to. Radios segment is precisely that one: selecting something to listen instead of us, enabling people to discover new acts. Obviously, the playlists system available on streaming platforms fulfil this role but not completely as they are not as well-known as radios and they are often too specialized to interest casual listener.

Main channel for listening music among teens is Youtube, used by 64% of them, nevertheless radio still way ahead as the best place for discovering. More precisely, 48% of the times we hear a song for the first time, we do so in radio, remaining cases are much lower as only 10% of the time the discovery happens thanks to a friend’s advice and a mere 7% of discoveries are done thanks to Youtube.

The number of ways to listen to music is so big it seems obvious that radio audiences is going down down. In reality, airplay has never been so high, breaking records every year. Nowadays, almost 70% of Americans listen to radio every day. Nearly 240 million per week. Even more impressive, adults spend an average 20% more time listening to radio than being on internet! How can we explain it giving the current fierce competition? Simply because the cake is bigger as we listen more music now than ever.

Even so, like TV channels do, general radios will start losing ground in favor to more specialized radios to better fit with consumer’s profile. Although we like hearing new songs, we still expect them to be consistent with our favorite genres.

6 thoughts on “Music Industry, an infinite Journey:
Part III – The Future”

  1. This is another fascinating article, quite long and detailed, with plenty of numbers, as I like.

    There are way so many things to comment, but one of them is about record companies. You are projecting the whole music industry (mostly thanks to streaming) will easily top the earnings achieved in 1999, record year. The question is, are record companies prepared for this sort of tsunami? Do they understand what it is going on right now? It seems you have been able to grasp this, but, overall, most people (both consumers and probably majors’ executives) don’t fully comprehend this phenomenom. It is like some of these things are passing unnoticed by most chart watchers and experts; most of them tend to be conservative and impugn Spotify and similar social services.

    In other words, what I’m asking is: how will promotion work once the streaming/subscription system is totally developed to stay? Traditional promotion may not work in this new stage. And I guess this new technology, far more democratic, may open room for smaller record companies.

    1. Hello Hernan! Indeed, this will be a real tsunami for the industry. Most of the industry is aware of how much profit they can make in the future, which explains why all there have been several strong movements to get a bigger share of this new pie lately. I expect years 2016-2018 to be marked by a ferocious war between all actors to take the lead and end on a powerful position to negociate as good as possible.
      I do not expect promotional campaigns to vary much yet as they are impacted by numerous external factors – radio programs, TV programs etc. The main difference should be that artists should get a higher profile promotion overall, just like it was the case in the 90s. B-League worldwide acts will be strongly promoted, A-League acts will have air-time on largest channels etc. unlike recent years that saw most acts be promoted only on local / network channels.

  2. Plus, you have also thrown another vital factor, not studied either up until now: the role of China in the future music industry.

    As the years go by, technology gets cheaper and thus more people across the globe has access to it. Smartphones are more “democratic” than the already old music players, so the market for music is potentially bigger than it ever was. This means more people in developing countries are starting to consume music in a way that was probably impossible some years ago.

    But China is a different story. Their music market is getting bigger not only because of technology but because of the country’s level of growth.

    I’m rasing this issue because, over the past 15 years, China has produced a huge impact on both the food and agricultural market. They eat more and better than in the past (adding basically pork and chicken to their diet), elevating the price of soybean, wheat, corn and meat (plus many fruits and beverages, like wine). Can they “distort” the music market like they did with food, for instance?

    Now not only are they eating better, but they are starting to consume music like in the Western world. Of course, USA, Europe or Australia will be consuming more music per capita than China, but China will have a role it has never had before.

    Perhaps China deserves a separate essay, don’t you think? The consequences (I’m not saying “consequencies” in a bad way, of course) of China finally entering the music industry haven’t been analysed yet. And it would also be interesting to know: which Western acts are popular there?

    1. Hello again Hernan! Indeed, demographics will change big time in upcoming years. In the 50s/60s, the world music industry was massively oriented towards English-speaking countries. In the 70s/80s, developped countries got included in the discussion – France, Germany, Japan & such. During the 90s, even small / isolated countries got a decent music market like most Asian countries, Brazil etc. During recent years, this phenomenon stopped with the map even coming back to the 70s situation – we can see how Adele’s 21 sold almost 19m copies out of 29 in North America, UK and Australia alone. The reason is that music industry isn’t profitable enough to develop local business, thus majors closed their offices in smallest countries (music sales wise).

      Streaming, as you mention, is incredibly democratic as Mexico or Brazil for example end up being as big or even bigger than France or Germany.

      China will be a tremendous actor in upcoming years. In movies industry for example, the 1999-2005 Star Wars trilogy grossed less than $20 million there. The new album is over $120 million alone by now. Fast & Furious 7 grossed more in China ($391m) than in the US ($353). The once irrelevant market is expected to become the biggest in the world as early as in 2017. Situation will be no different in the music industry with streaming arrival. In a few years only one may expect China results to top even the US music industry.

  3. Call me conservative. But somehow I missed the old days of going to the stores and buying physical album sales. People appreciate artist as well as their album so much more than today.

Leave a Reply

Your email address will not be published. Required fields are marked *