Taking Note of Music Tech’s VC and Accelerator Market Trends in 2017

As a part of today’s modern music industry there exists a complementary and thriving support system of venture capital firms and music tech startup accelerators who are providing a multitude of innovative services.  A fascinating examination of the current state of this ecosystem appeared in an article entitled Music Pushes to Innovate Beyond Streaming, But Investors Play It Safe: Analysis, by Cherie Hu, posted on Billboard.com on 7/24/17. I highly recommend reading it in its entirety for its insights, assessments and accompanying graphics.

I will summarize this feature here, add some links and annotations and, well, venture a few of my own questions. Also, I believe this is a logical follow to three previous Subway Fold posts about the music biz including:

Tempo

In mid-2017, the music tech market is generating signals as to its direction and viability. For example, Jawbone, the once thriving manufacturer of wearable audio devices is currently being liquidated; Soundcloud  the audio distribution platform let go of 40 percent of its staff recently only days before the firm’s tenth anniversary; and Pandora has experienced high turnover among its executives while seeking a sale.

Nonetheless, the leaders in music streaming are maintaining “the music industry’s growth”. Music tech showcases and music accelerators including SXSW Music Startup Spotlight, the Midemlab Accelerator, and Techstars Music are likewise driving market transformation.   During 2017 thus far, 54 music startups from more than 25 cities across the globe have taken part in these three entities. They have presented a range of submissions including “live music activations and automated messaging to analytics tools for labels and artists”.

While companies such as Live Nation, Balderton Capital and Evolution Media have previously invested in music startups, most investors at this mid-year point have never previously funded a company in this space. This is despite the fact that investments in this market sector have rarely returned the 30% that VCs generally seek. As well, a number of established music industry stars are participating as first-time or veteran investors this year.

Of the almost $900 million funding in music tech for the first half of this year, 75% was allocated for streaming services – – 82% of which went only to the leading four companies. However, there remains a “stark disconnect” involving the types of situations where music accelerators principally “lend their mentorship” in “hardware, virtual reality1, chatbots, label tools”, and the issues that VC concentrate the funding such as “streaming, social media, brands”.  Moreover, this situation has the potential of “stifling innovation” across the industry.

To date, music accelerators have “successfully given a platform and resources” to some sectors of the industry that VCs don’t often consider. For example, automated messaging and AI-generated music2 are both categories that music accelerators avoided until recently, now equal 15% of membership. This expansion into new categories reflects a much deeper “tech investment and hiring trends”. Leading music companies are now optimistic about virtual digital assistants (VDA) including chatbots and voice-activated systems such as Amazon Alexa3. As well, Spotify recently hired away a leading AI expert from Sony.

Rhythm

However, this “egalitarian focus” on significant problems has failed to “translate into the wider investing landscape” insofar as the streaming services have attracted 75% of music tech funding. The data further shows that licensing/rights/catalog management, social music media, and music, brands and advertising finished, in that order, in second at 11.1%, third at 7.1% and fourth at 3.9%.

These percentages closely match those for 2016. Currently, many VCs in this sector view streaming “as the safest model available”. It is also one upon which today’s music industry depends for its survival.

Turning to the number of rounds of music tech funding rather than the dollar amounts raised, by segments within the industry, a “slightly more egalitarian landscape” emerges:

  • Music hardware, AI-generated music, and VR and Immersive media each at 5.0%
  • Live music; music brands and advertising; streaming; and social music media each at 15.0%
  • Licensing, rights, and catalog management at 25% (for such companies as Kobalt Music, Stem and Dubset)

Categories that did relatively well in both their number of rounds of funding and accelerator membership were “catalog management, social music platforms, and live music”.

Those music tech startups that are more “futuristic” like hardware and VR are seen favorably by “accelerators and conference audiences”, but less so among VCs.  Likewise, while corporate giants including Live Nation, Universal Music Group, Citi and Microsoft have announced movement into music VR in the past six months, VC funding for this tech remained “relatively soft”.

Even more pronounced is the situation where musical artists and label services such as Instrumental (a influencer discovery platform) and chart monitors like Soundcharts have not raised any rounds of funding. This is so “despite unmatched attention from accelerators. This might be due to these services not being large enough to draw too “many traditional investors”.

An even more persistent problem here is that not many VCs “are run by people with experience in the music industry” and are familiar with its particular concerns. Once exception is Plus Eight Equity Partners, who are trying to address “this ideological and motivational gap”.

Then there are startups such as 8tracks and Chew who are “experimenting with crowdfunding” in this arena but who were not figured into this analysis.

In conclusion, the tension between a “gap in industry knowledge” and the VCs’ preference for “safety and convenience”, is blurring the line leading from accelerator to investment for many of these imaginative startups.

My Questions

  • Of those music startups who have successfully raised funding, what factors distinguished their winning pitches and presentations that others can learn from and apply?
  • Do VCs and accelerators really need the insights and advice of music industry professionals or are the numbers, projects and ROIs only what really matters in deciding whether or not to provide support?
  • Would the application of Moneyball principles be useful to VCs and accelerators in their decision-making processes?

 


1.  See the category Virtual and Augmented Reality for other Subway Fold posts on a range of applications of these technologies.

2.  For a report on a recent developments, see A New AI Can Write Music as Well as a Human Composer, by Bartu Kaleagasi, posted on Futurism.com on 3/9/17.

3.  Other examples of VDAs include Apple’s Siri, Google’s Assistant and Microsoft’s Cortana.

The Mediachain Project: Developing a Global Creative Rights Database Using Blockchain Technology

Image from Pixabay

Image from Pixabay

When people are dating it is often said that they are looking for “Mr. Right” or “Ms. Right”. That is, finding someone who is just the right romantic match for them.

In the case of today’s rapid development, experimentation and implementation of blockchain technology, if a startup’s new technology takes hold, it might soon find a highly productive (but maybe not so romantic) match in finding Mr. or Ms. [literal] Right by deploying the blockchain as a form of global registry of creative works ownership.

These 5 Subway Fold posts have followed just a few of the voluminous developments in bitcoin and blockchain technologies. Among them, the August 21, 2015 post entitled Two Startups’ Note-Worthy Efforts to Adapt Blockchain Technology for the Music Industry has drawn the most number of clicks. A new report on Coindesk.com on February 23, 2016 entitled Mediachain is Using Blockchain to Create a Global Rights Database by Pete Rizzo provides a most interesting and worthwhile follow on related to this topic. I recommend reading it in its entirety. I will summarize and annotate it to provide some additional context, and then pose several of my own questions.

Producing a New Protocol for Ownership, Protection and Monetization

Applications of blockchain technology for the potential management of economic and distribution benefits of “creative professions”, including writers, musicians and others, that have been significantly affected by prolific online file copying still remains relatively unexplored. As a result, they do not yet have the means to “prove and protect ownership” of their work. Moreover, they do have an adequate system to monetize their digital works. But the blockchain, by virtue of its structural and operational nature, can supply these creators with “provenance, identity and micropayments“. (See also the October 27, 2015 Subway Fold post entitled Summary of the Bitcoin Seminar Held at Kaye Scholer in New York on October 15, 2015 for some background on these three elements.)

Now on to the efforts of a startup called Mine ( @mine_labs ), co-founded by Jesse Walden and Denis Nazarov¹. They are preparing to launch a new metadata protocol called Mediachain that enables creators working in digital media to write data describing their work along with a timestamp directly onto the blockchain. (Yet another opportunity to go out on a sort of, well, date.)  This system is based upon the InterPlanetary File System (IPFS). Mine believes that IPSF is a “more readable format” than others presently available.

Walden thinks that Mediachain’s “decentralized nature”, rather than a more centralized model, is critical to its objectives. Previously, a very “high-profile” somewhat similar initiative to establish a similarly global “database of musical rights and works” called the Global Repertoire Database (GDR) had failed.

(Mine maintains this page of a dozen recent posts on Medium.com about their technology that provides some interesting perspectives and details about the Mediachain project.)

Mediachain’s Objectives

Walden and Nazarov have tried to innovate by means of changing how media businesses interact with the Internet, as opposed to trying to get them to work within its established standards. Thus, the Mediachain project has emerged with its focal point being the inclusion of descriptive data and attribution for image files by combining blockchain technology and machine learning². As well, it can accommodate reverse queries to identify the creators of images.

Nazarov views Mediachain “as a global rights database for images”. When used in conjunction with, among others, Instagram, he and Walden foresee a time when users of this technology can retrieve “historic information” about a file. By doing so, they intend to assist in “preserving identity”, given the present challenges of enforcing creator rights and “monetizing content”. In the future, they hope that Mediachain inspires the development of new platforms for music and movies that would permit ready access to “identifying information for creative works”. According to Walden, their objective is to “unbundle identity and distribution” and provide the means to build new and more modern platforms to distribute creative works.

Potential Applications for Public Institutions

Mine’s co-founders believe that there is further meaningful potential for Mediachain to be used by public organizations who provide “open data sets for images used in galleries, libraries and archives”. For example:

  • The Metropolitan Museum of Art (“The Met” as it is referred to on their website and by all of my fellow New York City residents), has a mandate to license the metadata about the contents of their collections. The museum might have a “metadata platform” of its own to host many such projects.
  • The New York Public Library has used their own historical images, that are available to the public to, among other things, create maps.³ Nazarov and Walden believe they could “bootstrap the effort” by promoting Mediachain’s expanded apps in “consumer-facing projects”.

Maintaining the Platform Security, Integrity and Extensibility

Prior to Mediachain’s pending launch, Walden and Nazarov are highly interested in protecting the platform’s legitimate users from “bad actors” who might wrongfully claim ownership of others’ rightfully owned works. As a result, to ensure the “trust of its users”, their strategy is to engage public institutions as a model upon which to base this. Specifically, Mine’s developers are adding key functionality to Mediachain that enables the annotation of images.

The new platform will also include a “reputation system” so that subsequent users will start to “trust the information on its platform”. In effect, their methodology empowers users “to vouch for a metadata’s correctness”. The co-founders also believe that the “Mediachain community” will increase or decrease trust in the long-term depending on how it operates as an “open access resource”. Nazarov pointed to the success of Wikipedia to characterize this.

Following the launch of Mediachain, the startup’s team believes this technology could be integrated into other existing social media sites such as the blogging platform Tumblr. Here they think it would enable users to search images including those that may have been subsequently altered for various purposes. As a result, Tumblr would then be able to improve its monetization efforts through the application of better web usage analytics.

The same level of potential, by virtue of using Mediachain, may likewise be found waiting on still other established social media platforms. Nazarov and Walden mentioned seeing Apple and Facebook as prospects for exploration. Nazarov said that, for instance, Coindesk.com could set its own terms for its usage and consumption on Facebook Instant Articles (a platform used by publishers to distribute their multimedia content on FB). Thereafter, Mediachain could possibly facilitate the emergence of entirely new innovative media services.

Nazarov and Walden temper their optimism because the underlying IPFS basis is so new and acceptance and adoption of it may take time. As well, they anticipate “subsequent issues” concerning the platform’s durability and the creation of “standards for metadata”. Overall though, they remain sanguine about Mediachain’s prospects and are presently seeking developers to embrace these challenges.

My Questions

  • How would new platforms and apps using Mediachain and IPSF be affected by the copyright and patent laws and procedures of the US and other nations?
  • How would applications built upon Mediachain affect or integrate with digital creative works distributed by means of a Creative Commons license?
  • What new entrepreneurial opportunities for startup services might arise if this technology eventually gains web-wide adoption and trust among creative communities?  For example, would lawyers and accountants, among many others, with clients in the arts need to develop and offer new forms of guidance and services to navigate a Mediachain-enabled marketplace?
  • How and by whom should standards for using Mediachain and other potential development path splits (also known as “forks“), be established and managed with a high level of transparency for all interested parties?
  • Does analogizing what Bitcoin is to the blockchain also hold equally true for what Mediachain is to the blockchain, or should alternative analogies and perspectives be developed to assist in the explanation, acceptance and usage of this new platform?

June 1, 2016 Update:  For an informative new report on Mediachain’s activities since this post was uploaded in March, I recommend clicking through and reading Mediachain Enivisions a Blockchain-based Tool for Identifying Artists’ Work Across the Internet, by Jonathan Shieber, posted today on TechCrunch.com.


1.   This link from Mine’s website is to an article entitled Introducing Mediachain by Denis Nazarov, originally published on Medium.com on January 2, 2016. He mentions in his text an earlier startup called Diaspora that ultimately failed in its attempt at creating something akin to the Mediachain project. This December 4, 2014 Subway Fold post entitled Book Review of “More Awesome Than Money” concerned a book that expertly explored the fascinating and ultimately tragic inside story of Diaspora.

2.   Many of the more than two dozen Subway Fold posts in the category of Smart Systems cover some of the recent news, trends and applications in machine learning.

3.  For details, see the January 5, 2016 posting on the NY Public Library’s website entitled Free for All: NYPL Enhances Public Domain Collections for Sharing and Reuse, by Shana Kimball and Steven A. Schwarzman.

Book Review of “The Song Machine: Inside the Hit Factory”

Image from Pixabay

Image from Pixabay

It is my completely unscientific theory that the music which often matters most to people is the music they listened to when they were young. From Stravinsky to Springsteen to Taylor Swift, the tunes of your youth will likely stay with you for life. These recordings will always get your attention whenever you hear them and perpetually occupy a special place in your heart from their opening bars to their final fades.

Is there really anyone of any age having any music preference who doesn’t get the chills or at very least tap a toe every time they hear the majesty of the Rite of Spring, the propulsive launch of Born to Run, or the megawatt energy of Shake It Off?

Today’s Music Biz and How It Got That Way

The music, artists, producers and companies who are the subjects in The Song Machine: Inside the Hit Factory (W.W. Norton & Company, 2015), by John Seabrook, are not those that I happened to grow up with. Nonetheless, for interested readers who either did or did not come of age at some point during the past two decades, this highly engaging account of the extraordinary changes throughout the music industry will provide readers with a compelling narrative, cultural history, and business case study. This book further excels as an insightful guide through the music industry’s production processes of writing, recording, marketing, distributing and performing today’s chart-topping tunes.

Like a well-arranged progression of chords, each successive chapter skillfully takes you deeper into the operations of the leaders and innovators of the music industry. It is not so much about the music celebrities’ personal lives as it is about the trajectories of their careers, particularly importance of steadily creating viable hits. Moreover, it carefully examines how smash recordings are well-crafted by everyone involved in their creation to make certain they succeed with global music audiences.

Seabrook illuminates exactly how many of today’s hits, as well as misses, have enough deliberate calculation in the assembly of their beats, lyrics and evocative musical “hooks” to send a rocket to, well, Nep-tune and back. His exposition of the evolution of the “hit factory” takes place beginning early Euro-Pop then on to the Backstreet Boys (and their competitors), and next to the emergence of today’s worldwide stars. He devotes quite a bit of his reporting to how this is done for today’s A-listers such as Rihanna, Katy Perry and Kesha by a small and closely knit group of writers and producers. How and why the leading creatives achieved their prominence in today’s music scene is also finely threaded throughout the book.

Going to a Global Go-Go

As colorfully detailed, the US is often the center of the music industry, with many of its leading participants gravitating towards New York and Los Angeles. There are other key international personalities from Europe and Asia. Sweden in particular had first given a start several of the most influential producers with long histories of innovation in Europe. Later on, they brought their work to the US and achieved even greater commercial success.

Another tectonic disruption, online file-sharing, is explained but not pursued in great depth. Rather, and rightfully so, the author chose to examine how purchasing and downloaded MP3s is now giving way to rising volumes of streaming. He reports on the webwide phenomenon of Spotify’s business model, including its disparate economic impacts upon consumers and musicians. (These seven Subway Fold posts also cover a range of developments involving Spotify.)

Clearly and by definition, factories are places where products are fabricated and shipped.  Their operations must be periodically modernized in order to remain competitive. So too, it has become imperative for today’s music industry to adapt or face decline. The Hit Factory takes readers deep and wide into this unique and worldwide production system where hits by many of the mega-stars’ hits are indeed manufactured. Seabrook’s expert prose conveys the incredible effort, business sense and precision this enterprise requires.

Two Part Harmony

If you have the opportunity to do so, I highly recommend reading both The Song Factory and How Music Got Free (previously reviewed in this August 31, 2015 Subway Fold post), together for a comprehensive understanding of how the multi-billion dollar music industry had fallen and then reinvented itself to rise again. Each book individually, and even more so together, deftly captures this unique world’s intersections of art, science and commerce.

For yet another engrossing historical perspective on the state of the music business set a few decades earlier during the 70’s and 80’s rock era, I further suggest reading a highly entertaining account entitled Hit Men (Crown, 1990), by Frederick Dannen.

Finally, all of the foregoing aside for a moment, have things really changed that much in the pursuit of musical success? Once you have finished The Hit Factory, I urge you to also listen to The Byrds’ 2-minute classic hit single So You Want to Be a Rock ‘N Roll Star and then to reconsider your answer. This song’s sentiment rings as true today as it did way back then.

That’s my theory and I’m sticking to it.

Two Startups’ Note-Worthy Efforts to Adapt Blockchain Technology for the Music Industry

"Coachella Day 1 [2nd week] - Sahara Tent", Image by The Bull Pen, This work is licensed under a Creative Commons Attribution 4.0 International License.

“Coachella Day 1 [2nd week] – Sahara Tent”, Image by The Bull Pen

With the advent and then propulsive web-wide spread of MP3 file technology during the last twenty years*,  all of the music industry’s consumers, artists, recording companies, talent agents, business models,  distribution channels and intellectual property rights have been radically transformed. Today, the big money in the industry today is most often made by artists with established names who are able to draw audiences during their tours, sell merchandise, and continue to sell and stream music from their catalogs.

Of course, nowadays every well-known, moderately known and unknown act has an online presence to engage and inform their fan bases through an array of social media platforms and dedicated websites. Still, the music biz today is an even tougher business to earn a dollar than it ever was before. (See also the December 10, 2014 Subway Fold post entitled Is Big Data Calling and Calculating the Tune in Today’s Global Music Market?.)

In an effort to adapt dramatically new technology to energize, innovate and democratize the music industry, two recent startups, both still in their development stages, are using blockchain technology in previously unseen and imaginative ways. The blockchain is, in its simplest terms, a distributed, decentralized, transparent and encrypted database that acts as an online ledger to record transactions, documents and other information. It is most often used to memorialize transactions involving bitcoin. (See the May 8, 2015 Subway Fold post entitled Book Review of “The Age of Cryptocurrency” concerning a comprehensive new book on this subject.)

These early stage startups were the subject of a truly fascinating article posted on Billboard.com on August 5, 2015 entitled How ‘the Blockchain’ Could Actually Change the Music Industry by Gideon Gottfried. I will summarize, annotate and ask some unencrypted questions of my own.

I.  PeerTracks

The first startup is called PeerTracks. Their plan is to establish a music streaming and retail platform that includes “fan engagement and peer-to-peer talent discovery”, according to its president, Cedric Cobban.  They will use the blockchain for its transactions and paying artists directly for any revenue generated when their music is streamed “on a per-user-share basis”. Their launch is currently planned in about two months.

The core of their approach is to generate marketing revenue through the use of “artist tokens”. This is a system whereby each musical artist can create their own tokens with their name and image, and then set the permanently fixed amount of them to be made available. These tokens are intended to take on the characteristics of a “sub-cryptocurrency” (similar to some of Bitcoin’s characteristics), whereby the value that emerges for them is a direct indicator, based upon supply and demand, of the artist’s appeal. Site users can also speculate on the future value of the music and merchandise of currently unknown musicians.

The artists on PeerTracks will have the capabilities to affect the relative value of their own tokens. They will be enabled to buy back their tokens with any income they generate from “streams, sales, merch, tickets”. They can also permanently eliminate some tokens to decrease their supply and, in turn, increase their value.

Conversely, artists can affect demand by the types of items they offer to their token holders. Among other things, they can offer “discounts, free tickets, giveaways”. By providing incentives for fans to acquire their token, artists can raise the tokens’ relative values. As well, there are potential benefits to advertisers on PeerTracks interested in implementing paid sponsorships for more recognized music acts with product giveaways.

All songs uploaded on the site will be accompanied by a “smart contract“. According to the immediately preceding link to Wikipedia, smart contracts are “computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause”.  The smart contracts on PeerTracks divide up the funds generated accordingly among the parties involved in the song’s composition and performance. This is considered to be an important advance in using the blockchain and, it is hoped by developers currently working on this, will become a platform upon which new business models will emerge.

II.  Ujo

The second startup in this space is called Ujo. Their plan to use the blockchain to improve both the distribution of royalties to artists and music licensing. They intend to accomplish this by establishing a “rights and payment infrastructure”. It will be free to use and open for third parties to create their own apps for new services including, among others, curation, streaming and negotiation.  Similar to PeerTracks, they are working on an alternative means to distributing revenues to “artists and rights holders”. Furthermore, they are trying to build a blockchain-based means to determine ownership of creative works.

The prospective adoption of this by the music industry of this entirely new system is expected to take time because of its tendencies to keep data private as well its outdated and often incompatible systems. Phil Barry, who is involved Ujo along with about 20 other developers, hopes their new system will unify and replace the legacy systems. He believes the platform will provide economic advantages to artists and recording companies receiving their royalties through it. As well, this will provide “new revenue and business models”, new ways for consumers to enjoy music, and simplification to the manner in which “music is managed and licensed”.

When an artist creates a new song in the future, using Ujo it will be permanently stored on the blockchain and assigned a unique ID. If another artists or performers changes anything about the song, their subsequent versions will receive a new ID and be “instantly recognizable”. Any resulting revenue from the song will then be distributed immediately and “proportionately to each rights holder”.

My own questions are as follows:

  • What other marketplaces, technologies and professions would benefit from using comparable types of blockchain adaptations?
  • Could traditional legal documents such as contracts, leases and wills, among many others, be written to the blockchain to make certain that all parties to them met their obligations?
  • Could artists’ tokens likewise be created for actors, writers, painters, graphics artists and other creative types?
  • What would be the results of a book or any other publication being written to the blockchain in terms of royalties, rights, subscriptions and recognition?

March 4. 2016 Update: For a related follow-up on this post please see the new Subway Fold post entitled The Mediachain Project: Developing a Global Creative Rights Database Using Blockchain Technology

June 5, 2017 Update:  An new article posted today, June 5, 2017, on the Harvard Business Review blog entitled Blockchain Could Help Musicians Make Money Again, by Imogen Heap, looks at the potential of blockchain technology from a musician’s point of view. A highly recommended read if you have an opportunity to click through. 


*  For an outstandingly written and highly engaging account of the total transformation of the music industry, I very highly recommend a recently published book entitled How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy, by Stephen Witt (Viking, 2015). I just finished reading this and to say the least, it rocked.

Is Big Data Calling and Calculating the Tune in Today’s Global Music Market?

music-159870_1280-1The extraordinary degree to which big data apps and analytical services are now affecting the marketing, economics, talent development and the popularity of new tunes, has just been thoroughly and expertly explored in an article in the November 2014 issue of The Atlantic entitled The Shazam Effect, by Derek Thompson. This report covers this phenomenon across a multitude of musical genres and commercial venues. I highly recommend checking out this piece in its entirety for a true sense of this ongoing revolution in terms of the leading participants and the fascinating issues concerning business and creativity.

The following is my own summary, annotations and commentary upon just some of the key – – forgive me – – players, market data and open issues worth, well, noting.

I.  Today’s Key Music Business Data Players:

  • Shazam on its surface is an app that helps users to identify a particular song or melody. To date, it have been downloaded half a billion times and is searched 20 million times each day. It can identify emerging songs with breakout potential months in advance. While users enjoy its ability to readily identify a song, the music industry engage it as and early radar array. As well, it assists in identify unknown performers for talent scouts and agents.
  • Pandora and Spotify data sets are used by concert promoters and performers to shape touring venues and set lists. (X-ref to this August 14, 2014 Subway Fold post entitled Spotify Enhances Playlist Recommendations Processing with “Deep Learning” Technology.) One of Pandor’s executives, Eric Bieschke,  is quoted that his online service is not driven by a singular algorithm, but rather “a meta-algorithm that directs all of the other algorithms” to enable users to select songs and artists from the vast  troves of music across the Web.
  • Next Big Sound is a dedicated music analytics firm that gathers, blends and assesses relevant data streams from Spotify, Instagram and other online sources. In turn it sifts through this to identify 100 possible music stars to emerge during the next year. They are currently achieving a success rate of twenty percent. The company also offers a subscription based customizable search tool called “Find”  that will gather and assess selected data flows from Twitter, Facebook and other social platforms. They have found performers’ Wikipedia pages to be valuable predictors.
  • iHeartMedia (previously known as Clear Channel¹) uses Shazam to gauge the virality of new songs and Nielsen Audio deployment of tech called Portable People Meters to track individuals’ radio listening, (X-ref to this July 31, 2014 Subway Fold post about Nielsen’s data and analytics work entitled New Analytical Twitter Traffic Report on US TV Shows During the 2013 – 2014 Season.) HitPredictor, a subsidiary of iHeartRadio, accurately forecasts hits prior to their release by playing them for a large online test audience in order to solicit their feedback.
  • Billboard Top 100 (BT100) combines point-of-sales sales data, download music numbers and Nielsen’s listening metrics. One result is that songs remain on the BT100 longer. As a result of this “the relative value of a hot has exploded”. Thus, the top 1% of recording artists earn 77% of all recorded music sales, while the top 10 selling songs have increased their capture of the market by 82% during the last decade. This is indeed a market where the revenue rich continue to get richer revenues.

II. Current Market Influences and Trends:

  • Wisdom of the Crowds:  Before the advent of big data, music company execs largely relied on their own instincts in choosing artists and products to promote. Now with the advent of these sophisticated apps and services, they are relying on upon a group f principles known as the wisdom of the crowds². Very simply stated, large and diverse groups of people, such as the web-wide millions using these services, is more likely to make more accurate decisions and forecasts than smaller groups and/or experts in the relevant field(s).
  • The Long Tail Effect:  As noted above, there is an intense and very small concentration among artists for whom big data and analytics is producing economic rewards.³
  • Social Media:  Some, but not all to the same degree, of these platforms are now the major drivers in marketing new artists and their new music. They might even be more influential than the tradition of drawing audiences to live concerts.
  • Radio Airplay:  This mainstream media, while maintaining its ongoing relevance in the music business, likewise replies just as heavily on all of the social media and data analytics in order to “connect all these dots”. The Wisdom of the Crowds also plays an integral part of radio programming.*
  • Overproduction of Repetitive and Bland Music:  Music industry people whom Thompson approached for this article expressed concern that the data-driven nature of today’s market is producing a “clustering” of music in different genres and, in turn, noticeable levels of sameness and copycat acts. Nonetheless, he further writes that research shows that listeners very often seek out familiar music they have heard many times before.
  • Effects Upon Musical Artists: Notwithstanding the prior point, musicians and composers are aware of this phenomenon but generally have limited its effects upon their creative output. As well, some will add variations and imperfections to their live performances in order to keep them sounding fresh. (X-ref to this August 11, 2014 Subway Fold Post entitled The Spirit of Rock and Roll Lives on Little Steven’s Underground Garage about how, among other things, this is one of the basic tenets of  Garage Rock.)

III. Ongoing Issues:

  • At the very heart of all of this activity is, as precisely framed by Thompson “What do people want to hear next?”
  • While the music business is significantly benefiting from the accuracy of all of this data and calculation, is it likewise producing “better”, more diverse and imaginative music for audiences to consume?

My own additional questions include:

  • Despite the Long Tail effect, are artists is the much longer end of the curve still accruing some demonstrable benefits from big data insofar are being heard by larger audiences online and in concert?
  • Based upon the monumental amounts of past, present and future data about music and the music industry, could deep learning and other artificial intelligence (AI) methods be used to produce genuine hit songs in multiple genres, without any human intervention? Alternatively, is the human touch always needed in the musical arts? If the answer ever turns out to be “not always”, what are the implications?
  • Could analytics and AI produce a new genre of music that is not necessarily a hybrid? That is, are there sounds, rhythms, arrangements, styles, tablatures and so on that have not yet emerged and can be entirely machine synthesized?
  • The article mentions that Led Zeppelin’s iconic Stairway to Heaven was never played much after its initial release and that it never landed on the BT100. As an experiment to test the validity and accuracy of today’s music data apps and services, what would happen if many such great hit were retroactively tested? Would any be proven to be hits that never should have occurred according to today’s tech and, conversely, are there obscure songs from years ago that would produce results indicating they should have been hits? Could or even should, such results be used to further fine tune, if not develop new musical data methods and metrics?
  • What other new opportunities will arise, based on this merger or art and science, for entrepreneurs, artists, talent scouts and agents, established music companies, and concert halls?

December 19, 2014 Update: 

Adding to the big data strategies and implementations for three more major music companies and their rosters of artists was a very informative report in the December 15, 2014 edition of The Wall Street Journal by Hannah Karp entitled Music Business Plays to Big Data’s Beat. (A subscription for the full text required a subscription to WSJonline.com, but the story also appeared in full on Nasdaq.com clickable here.) As described in detail in this report, Universal Music, Warner Music, and Sony Music have all created sophisticated systems to parse numerous data sources and apply customized analytics for planning and executing marketing campaigns.

Next for an alternative and somewhat retro approach, a veteran music retailer named Sal Nunziato wrote a piece on the Op Ed page of The New York Times on the very same day entitled Elegy for the ‘Suits’. He blamed the Internet more than the music labels for the current state of music where “anyone with a computer, a kazoo and an untuned guitar” can release their music  online regardless of its quality. Thus, the ‘suits’ he nostalgically misses were the music company execs who exerted  more controlled upon the quantity and quality of music available to the public.

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1Right Off the Dial  (Faber & Faber, 2009), by Alec Foege, chronicled the causes and effects of the company’s rapid rise in the commercial radio industry. I found this to be an eye-opening and very informative account of rapid consolidation within a specific sector of the mainstream media. I recommend it to anyone interested in this company and topic.

2.  For a well reviewed and highly readable treatise on this, I also very highly recommend The Wisdom of
the Crowds by James Surowiecki (Doubleday, 2004). Also here is a Wikipedia page summarizing some of the main points of the book.

3.  The definitive and superlative book on one of the most interesting outgrowths of online commerce is The Long Tail by Chris Anderson (Hyperion, 2006). Furthermore, I also highly recommend his incredibly diverse and entertaining show on NPR called Studio 360.

*  I still that think Bruce Springsteen’s take on the state of music radio in 2007, Radio Nowhere, deserves a click and listening here. Besides, it’s an exhilarating rocker.