Business essay questions

Anonymous
timer Asked: Apr 11th, 2017

Question Description

Write 2 pages answering the questions based on the information from the articles document below.

  1. What sociocultural trend is important to the streaming industry?
  2. How does capacity capture relate to music streaming?
  3. Why is it important to compare the ad revenue from Youtube for music and the revenue from Vinyl records?
  4. Why is IBM’s Watson a concern for music?
  5. What is the next technological development in music?
  6. What recommendation do you have for Facebook? Why?

Streaming Has Officially Taken Over the Music Business Mar 22, 2016 America has a new favorite way to pay for music. For the first time ever, retail revenue from streaming services eclipsed revenue for digital downloads in 2015, according to the Recording Industry Association of America. Music fans are opening their wallets to pay for music subscription services, or listening to songs on free adsupported platforms. Streaming comprised 34.3 percent of industry revenue for the year, bringing in $2.4 billion. Digital album and track downloads, which have been in decline for years, came in just behind with a 34 percent share of the market, followed by physical formats. In total, revenue was up about 1 percent, to $7 billion for the year. Streaming services have been around for more than a decade. One of the first, ironically, tried to leverage the brand of Napster, the file-sharing service that introduced music piracy to the masses. But the two companies most responsible for streaming’s success are Spotify, the first subscription service to find a large audience, and YouTube, which is the most popular method for listening to music online. The RIAA has one big problem with both these platforms: they let people listen to music on demand for free. These ad-supported listening experiences brought in less than $400 million in revenue in 2015, compared to $1.2 billion from paid subscription services. Vinyl records were actually more lucrative for the music industry than YouTube streams, bringing in $416 million in revenue. This disconnect between massive increases in music consumption and paltry gains in revenue is one reason artists like Taylor Swift and Adele have been withholding their albums from streaming services. But those efforts by certain superstar artists aren’t stopping people from choosing to stream songs instead of buying individual albums. The pressure to tighten the reins on free music will likely increase. YouTube introduced a subscription service last fall, and Spotify, which has always had the same music on its free and paid tiers, has been mulling keeping some content exclusive to paying customers. Expect access to music to get more expensive, not less, as artists and labels try to regain more of the revenue lost since the CD era. Streaming Is The Future Of Music, But It's Shaky By now, it is clear that whether those involved like it or not, streaming is the future of the music. Every year, album sales decline, and while some singles have still been able to sell millions upon millions, that’s not enough for an entire industry to subsist off of. While this may be the case, and streaming might be here to stay, the business models that exist today aren’t working out very well. The biggest players in the space—Spotify, Pandora, and the like—have all had a hard time actually making a profit, and that is never a great way for a business to operate. While they all may now have paying consumers numbering in the tens of millions, losses continue to grow right alongside gains in users and revenue. In 2014, Spotify reported impressive earnings of $1.3 billion, but that figure came accompanied with losses of just under $200 million. Both of those figures are up dramatically from the year prior, and there is no reason to believe that the trend won’t continue when the company reveals its complete 2015 financials. Later last year, Pandora shared that it had lost over $85 million in just a single quarter, and smaller competitor Rhapsody is also in trouble, as it lost more than $35 million in 2015. Those companies that get the most attention and users have thus far been able to survive thanks to several rounds of funding, but ones that can’t rake in the millions from bigger firms have gone under. Rdio, Live365, and Songza are just a few of the services that haven’t been able to keep up and have since shuttered. The streaming business may have well-publicized tiny payouts for artists, but apparently getting into the industry is rather expensive. So, if the streaming platforms that are popular now can’t make enough money to stay above water with their current models, what is to happen to the industry? Will there finally be enough cash if a certain number of people sign up and start paying? Will they need to start charging more than the standard $9.99 per month? Perhaps these companies will need to find other ways to make money, which is somewhat ironic, as that is what the streaming industry has forced many musicians to do. It’s safe to say that streaming music isn’t going anywhere fast, but something is going to have to change in order for many of these companies to survive, though a solution isn’t clear just yet. Streaming is making the music industry more unequal This year we saw that streaming music favors the few Jamieson Cox and Micah Singleton talk about how the rise of streaming music is making one of the music industry's big problems even bigger. Apple is making a big investment in streaming, YouTube's joining the circus, and Google and Spotify's products keep getting bigger. Is any of the new money coming in trickling down to the artists who deserve it? Here's what we learned in 2015. Jamieson Cox: Micah, there’s an idea I can’t get out of my head when I think about the music industry in 2015: musical inequality. Micah Singleton: That doesn’t sound promising. In what sense? Jamieson: This was the year in which the gap between the world’s biggest artists and its version of blue-collar workers — the difference between Adele and your favorite indie rock band, basically — became really striking. It was also the year music streaming took off, and you can bet the two are related. Spotify increased its user base, Apple joined the race, YouTube launched a paid service, and Tidal… tried its best. The problem is that all of these services are contributing to a system that only really works at scale. Micah: I agree. The major acts have always controlled the lion’s share of artist revenue, but not to this extent. It’s gotten to the point where indie artists aren’t able to make a living simply by releasing albums. A good album by itself isn’t financially sustainable for many artists. Jamieson: That’s right. Let's look at an example. Drake’s If You’re Reading This It’s Too Late was one of 2015’s most popular albums, and it was available on Spotify as soon as it was released. When we had this conversation, the album’s tracks had been played a combined 768 million times. Not bad, right? Spotify quotes its average payout to rights holders somewhere between $0.006 and $0.0084 per stream. Let’s be charitable and give Drake the high-end payout. If we do so, IYRTITL generated about $6.45 million in revenue for The Boy. (This is a big simplification, but let’s roll with it for a minute.) But Drake is part of music’s 0.1 percent, and even relatively successful bands fare far worse. Baltimore duo Beach House's Depression Cherry debuted in Billboard’s top 10 in August to positive reviews. If we apply the same math we used above, Depression Cherry has earned Beach House approximately $126,000 on Spotify since its release. That’s about 2 percent of the amount Drake made, and it’s surprisingly low given how successful the album was. There are thousands of artists less prominent than Beach House trying to make a living with their music, and they aren’t making enough money to do it. Micah, I know you can help me out here: how are musicians going to make enough money if they’re not at the industry’s highest level? Micah: If you believe music executives, the answer is getting more people to pay for streaming. Around 40 million users pay to stream music right now; the current industry-wide target is 100 million paid users. Hitting that number might give per-stream payouts the bump most artists need to achieve financial stability. Jamieson: But it’s not like all the money the services shell out goes right into musicians’ wallets, right? Labels can make money from both ends if streaming keeps growing Micah: Unfortunately not. Labels take a big cut of that money, and they own stakes in companies like Spotify and Vevo, meaning they can make money from both ends when streaming becomes more popular and profitable. Tidal was the only service that made the "artists are underpaid" argument directly to consumers, and it botched that message so bad that it may be a while before anyone else can use it. Sure, people are getting more accustomed to paying a monthly fee for music, but it could take a while before that shift translates into increased revenue for artists. It's a good thing there are so many major companies investing in music streaming. The digital downloads market was defined by iTunes’ near-monopoly, but the streaming market is competitive, and that could lead to artists getting better streaming deals in the long run. Or it all could backfire, and streaming services may slash prices to help grow their user bases if people aren’t signing up fast enough. Do you think we’ll get any closer to solving this so-called inequality problem next year? Jamieson: It’s hard to say, but I’m not optimistic. On a platform level, the distribution of wealth could change — you mentioned some of this year’s new competitors above, and other big companies (Facebook?) could yet decide to make their own concerted efforts at grabbing a piece of the pie. Other services could end up folding or consolidating the way Rdio did late this year. But you said it yourself: platform jockeying and changes in the size of the paid user base don’t necessarily trickle down into better deals for garden-variety artists. It became clear this year that there are only a few artists with the cultural and commercial leverage to make decisions re: their music’s availability. Taylor Swift can yank her music from Spotify and convince Apple to change its royalty policy; Drake can sign over exclusivity to Apple Music; Adele can tell everyone to go to hell and set records while doing it. Everyone else is just struggling to make money and be heard, and I think that struggle is going to continue in 2016. Streaming: how Apple Music, Tidal and Spotify are trying to make music pay Beyoncé celebrated her seventh wedding anniversary with her impresario husband Jay-Z the only way the queen of pop should: by releasing her new single, “Die With You”, exclusively on his new streaming service, Tidal. Jay-Z hopes that exclusive singles will convince fans to subscribe to his library of millions of songs, even though they can listen to most of those songs free on YouTube or Spotify. He is also promising to put money and control back in the hands of artists like Taylor Swift, who took her music off Spotify and put it on Tidal, reasoning that music cannot survive if listeners don’t pay for it. Beyoncé’s single release proved the opposite: even if you try to force people to pay for music, they will find a way to listen to it anyway. Within half an hour of Tidal premiering “Die With You” last month, it was on YouTube. Sony had teams of people working to take down fanuploaded versions that were replaced as quickly as they could be removed. “Sony is playing a game of whack-a-mole with people who would never consider themselves pirates. They are not out to hurt their favourite artist,” said Tim Ingham, editor of the Music Business Worldwide website. “In this war between free and paid-for music, so long as music and pirates exist, the notion of an exclusive is almost laughable.” If anyone can access 43 million songs without charge, the future of the recorded music industry rests on its ability to solve one problem: how to make people pay. Subscription, or streaming, services are the recorded music industry’s fastest-growing source of cash. The number of people streaming rose by 40 per cent in 2014 (including free subscriptions such as Spotify), according to the most recent report by the International Federation of the Phonographic Industry. In the five years to 2014, subscription revenues grew more than sixfold to $1.6bn (£1bn), accounting for 23 per cent of total digital revenues. Last year, for the first time, the music industry derived as much revenue from digital as it did from physical formats such as vinyl and CDs. Jon Webster worked his way up from the shop floor to become the head of Virgin Records in 1988. Now the chief executive of a trade body for artist managers, called Music Managers Forum, Mr Webster can remember people asking him what he thought of the digital compact cassette when it was marketed in the early 1990s. “We don’t care! Whatever the consumer wants to buy it on, we’ll sell it on,” Mr Webster said. “We have seen the world go half digital. The industry must meet those demands.” Music has always been a portfolio business. Digital downloaded music, played on iPods and phones, was thought to be the next big thing, but it is already in decline. In 37 global markets, including South Korea, Sweden and Mexico, streaming now generates more revenue than downloads. Instead, the business model is shifting away from people owning songs at all, to a world where people pay to access them. Managers and labels already place less importance on album releases, because they expect fans to stream the tracks they like online. Last summer, the albums and singles charts started to count streamed tracks in the same way they do records sold. Many in the industry are excited that consumers still want to pay for music at all. “In an era where the recorded music business was looking to protect against piracy, here is a way we are making money again,” said James Sandom, who manages bands including Belle and Sebastian, Interpol and Kaiser Chiefs. The margins are still small. Of 60 million Spotify subscribers, only 15 million pay £9.99 for adfree and offline streaming. Mark Williamson, the head of artist services at Spotify, said increasing the number of subscribers was more important than getting hung up on fees. “We are convinced that the way to boost subscribers is to get people hooked,” he added. Mr Williamson said the number of paying subscribers doubled in a year after Spotify introduced a mobile service – despite only a limited number of songs and playback options being available free on mobile devices. “We learned that, instead of preventing people from using the service on the phone, if we can convince them to come in and use it, they are more likely to upgrade,” he said. That’s a business model that investors are buying into. Recent reports of a $400m round of funding for Spotify adds up to a market valuation of $8bn. But the marketplace is about to get more crowded. Apple, which refused requests for comment from The Independent, is widely expected to launch its own streaming service this summer after it bought Dr Dre’s Beats last year. “Apple is launching a pay-only service, we’re assuming,” Mr Ingham said. He noted that if the labels wanted to help a pay-only service to thrive, they could limit big releases by the likes of Adele or Beyoncé to the one service for a few weeks, thus starving the likes of Spotify and driving people either to pay or pushing them back towards piracy sites. “Most in the industry won’t want to see this,” Mr Ingham said. Apple already has the credit card details of 500 million people though iTunes. If it can convert 10 per cent of these to a paid streaming service it will double the number of subscribers overnight. It may not want to, for fear of hurrying the death of download sales and, by proxy, iTunes. But Spotify, Tidal and other streaming sites are not waiting around to find out. They are already looking at other ways to compete, such as with algorithms that allow intelligent recommendations of tracks and multiple payment options. Tidal offers promotions for users who commit to a year’s worth of service, while Spotify allows family access for up to four users at a discounted rate. Streaming may diversify the music industry portfolio even further, but it’s not going to go away. “Streaming is here, it’s a major part of our business,” Mr Webster said. “We have to embrace it – wherever we end up.” An explosion in global music consumption supported by multiple platforms Digital music in figures The recording industry is a mixed-format business, offering music fans a diverse range of formats, including not only hundreds of streaming services, but everything from downloads to CDs and vinyl. The recording industry’s global revenues for 2015 came from a number of revenue streams: 39% physical format sales 45% Digital revenues 14% Performance rights 2% Synchronisation revenues The global music market achieved a key milestone in 2015 as digital became the primary revenue stream for recorded music, overtaking sales of physical formats. Digital revenues now account for 45 percent of total revenues, compared to 39 per cent for physical sales. In the latest step of the industry’s hard-fought and successful evolution in the digital world, digital revenues rose 10.2 percent, leading to the industry’s first significant growth year-on-year growth in almost 20 years. Streaming remains the industry’s fastest-growing revenue source. Revenues increased 45.2 per cent to US$ 2.9 billion and, over the five year period up to 2015, have grown more than four-fold. Helped by the spread of smartphones, increased availability of high-quality subscription services and connected fans migrating onto licensed music services, streaming has grown to represent 19 per cent of global industry revenues, up from 14 per cent in 2014. Streaming now accounts for 43 per cent of digital revenues and is close to overtaking downloads (45 per cent) to become the industry’s primary digital revenue stream. Premium subscription services have seen a dramatic expansion in recent years with an estimated 68 million people now paying a music subscription. This figures is up from 41 million in 2014 and just eight million when data was first compiled in 2010. Downloads remain a significant offering, accounting for just 20 per cent of industry revenues. Income was down 10.5 per cent to US$ 3.0 billion – a higher rate of decline than in 2014 (- 8.2 per cent). Full album downloads are still a major part of the music fans’ experience and were worth US$1.4 billion. This is higher than the level of sales in 2010 (US$983 million) and 2011 (US$1.3 billion). An estimated 68 million people paid for music subscription services in 2015, more than eight times the level of eight million people in 2010 Performance rights revenue grew. Revenue generated through the use of recorded music by broadcasters and public venues increased 4.4 per cent to US$2.1 billion and remains one of the most consistent growing revenue sources. This revenue stream now accounts for 14 per cent of the industry’s overall global revenue, up from 10 per cent in 2011. Revenues from physical formats declined, albeit at a slower rate than in previous years, falling by 4.5 per cent compared to 8.5 per cent in 2014 and 10.6 per cent in 2013. The sector still accounts for 39 per cent of overall global income and remains the format of choice for consumers in a number of major markets worldwide including Japan (75 per cent), Germany (60 per cent), and France (42 per cent). MUSIC STREAMING – A GLOBAL STRATEGIC BUSINESS REPORT Era of OnDemand Media & Steaming Opens Massive New Opportunities for the Music Streaming Market, According to a New Report by Global Industry Analysts, Inc. GIA launches comprehensive analysis of industry segments, trends, growth drivers, market share, size and demand forecasts on the global Music Streaming market. The global market for Music Streaming is projected to reach US$9.7 billion by 2022, driven by the emerging new era of streaming media delivery supported by the proliferation of high-speed Internet, cloud technologies, and the changing rules for accessing media in the emerging world of mobile and connected devices. The emergence of digital music and proliferation of the Internet has transformed the way music is accessed worldwide. Music streaming, also called streaming audio, enables real-time, uninterrupted listening to music without the need to download the file. The service allows users to legally gain access to millions of songs in high quality in return for a nominal subscription fee or for free over a service-defined period. Proliferation of smartphones and robust mobile Internet are driving the trend towards mobile streaming. With technology allowing people instant access to products and services, demand for instant music access coupled with innovation in services are contributing to rapid growth in popularity of ondemand music streaming. With consumerism creating the “Impulse Society”, consumer culture today stands elevated to immediate gratification of information, entertainment and communication needs. Anywhere, real-time, and instant access to music are buzzwords for success in the music retailing industry. Paid-for or subscription music streaming is the largest contributor to overall revenue in the on-demand streaming market. Ad-supported music streaming accounts for the largest share of the market in terms of number of users, while its contribution in terms of revenue remains small. The recent years have witnessed significant pressure on companies particularly in developed markets to gradually move out of free services and focus less on freemium services. As a result, many streaming services today offer full-featured paid services. Subscriptions are gaining significant adoption as against free access, indicating consumer willingness to pay for premium content and service features. To ensure sustained growth service providers are embarking on various strategies such as bundling services with mobile subscriptions, providing advanced features such as curation and recommendations, impregnating music streaming in social media and diversifying into in-car streaming. While revenues from streaming services are expected to surge, the industry faces hurdles such as the potent threat of piracy, lack of profitability, licensing issues and intense competition. Some of these pressures have already sparked consolidation within the industry, which is expected to continue in the foreseeable future. As stated by the new market research report on Music Streaming, the United States represents the largest market worldwide. Asia-Pacific ranks as the fastest growing market worldwide, with a CAGR of 13.4% through the analysis period. The growth in the region is led by growing sales of smartphones, increase in mobile Internet subscriptions, improved bandwidth speed with the launch of 3.5G & 4G networks, rising disposable income, digitalizing lifestyles of the affluent middle class population and increased spending on digital leisure and entertainment solutions. 7 Ways Streaming Music Will Change in 2017, After Another Crazy Year The music industry continued to adapt to the digital world in 2016. And there’s much more chaos and innovation to come. Last year was another eventful one in the history of music. And that was no surprise. In 2016, the music industry saw its first signs of true growth since the internet started ravaging it a decade and a half ago. By mid-year, labels saw revenue grow 8.1% over the same period in 2015, fueled mostly by an explosion in subscribers flocking to services like Spotify (40 million subscribers) and Apple Music (20 million). Indeed, in early 2016, we learned that streaming had officially become the industry’s biggest source of income in 2015. While revenue from downloads and physical album sales both continued their years-long decline (by 14% and 17%, respectively), streaming revenue grew 57% during the first half of 2016, and since then, all signs have pointed to continued growth. This is good news for record execs, but what it means for artists and streaming platforms—which each have their own contractual relationships with labels—remains to be seen. As the pie grows, expect to see intensified battles over how it all gets divvied up. There were also big changes within the streaming landscape itself. Amazon and SoundCloud launched Spotify competitors. Apple polished up its existing service with a new interface. Pandora also unveiled its premium subscription service, expected to launch in the first quarter of 2017. For those keeping count at home, that’s three new subscription services in one year, on top of the three that launched the year before (Tidal, Apple Music, and YouTube Red). Despite all the new competition, Spotify has held onto its dominant role, growing its listenership and flexing its playlisting muscle with more in-house curation and data-powered personalized playlists like Discover Weekly, Release Radar, and Your Daily Mix. Despite all the upward-sloping numbers, the music industry still found reason to gripe. Its chief target this year was YouTube, which, along with Spotify’s free tier, creates what the RIAA calls a “value gap” for the industry. Simply put, ad-supported services just don’t make as much money as music subscriptions. Indeed, vinyl sales—a relatively tiny sliver of the industry’s income— generated more money than ad-supported streaming like YouTube, SoundCloud, and Spotify’s free tier. There was tension elsewhere as well. Frank Ocean pulled a fast one on his label Def Jam by releasing his short visual album Endless on Apple Music to fulfill his contract before selfreleasing the blockbuster Blond and denying Def Jam a cut of the profits. The maneuver made record executives rethink the already-controversial practice of releasing albums by major artists exclusively on one platform, which may help drive subscription numbers, but frustrates fans and encourages piracy. Up until that point, big-name exclusives practically defined the year in popular music: Kanye West, Drake, Beyoncé, and Chance the Rapper all put out albums initially available only via either Apple Music or Tidal. (Spotify refuses to play this game.) Meanwhile, the concept of the album itself became ever more fuzzy, thanks to visual albums (i.e., music released as a long-form video or film) from Ocean and Beyoncé, plus Kanye West’s post-release editing of Life of Pablo. With so much change in the last few years, what could 2017 possibly hold? Plenty. Here are our predictions. The Music Subscription Boom Will Continue The number of people willing to pay $10 a month for music skyrocketed in 2016, but it’s still pretty small. All told, about 100 million people are believed to subscribe to music services. (This doesn’t include free streaming from SoundCloud, YouTube, or Spotify’s free tier.) But considering that there are 319 million people in the United States alone, there’s plenty of room for growth. Just look at Apple Music. The service, which is available in 113 countries and comes pre-installed on every iOS device, only took a year and a half to reach half of Spotify’s size in terms of paying subscribers. And they both keep expanding. Now we have Amazon Music Unlimited, which is well positioned to reel in new subscribers at $8 per month for Prime members. When Pandora finally launches its subscription service, it will have 78 million listeners to potentially convert into paying subscribers—not to mention a newfound possibility of expansion beyond the U.S., New Zealand, and Australia (although those plans are still being hammered out). Streaming music is also breaking free from the confines of our smartphones and laptops. Thanks to the rise of smart speakers like Amazon Echo, Sonos, and Google Home, more listening is happening at home, making the prospect of treating music like a monthly utility an even more sensible one. Cheaper family subscription plans don’t hurt, either. At Least One Music Service Will Disappear We’ve seen five new music subscription services arrive in the last two years (and one more coming from Pandora early next year), but that doesn’t mean music streaming has become a lucrative successful business. Quite the opposite: None of these services has made an enduring profit, although Spotify is working aggressively toward that goal as it gets ready to go public next year. Big tech companies like Apple, Google, and Amazon can afford to run their music services at a loss indefinitely. This landscape makes it tricky for smaller players like Tidal, SoundCloud, Deezer, and Napster (formerly Rhapsody). Both Tidal and SoundCloud were the subject of acquisition rumors in 2016, and rumors continue to swirl around the prospect of Pandora selling itself off. Bandcamp would make a very attractive acquisition for Pandora or Spotify, but the artist-centric music and merch marketplace is well positioned to stay independent if it prefers: The company has been profitable since 2012 and its cultural influence is only growing. The bottom line: Expect to see fewer music services this time next year. At least one of these companies is bound to get acquired or go under altogether. Streaming eExclusives Won’t Die Frank Ocean may have put a damper on the industry’s enthusiasm about platform-exclusive album releases, but don’t expect to see the trend die off just yet. Universal (owner of Def Jam) may have sworn them off, but the other major labels have remained silent on the issue. Besides, in an age when many artists have an unprecedented capacity to chart their own course, does it really matter what the labels think? Apple and Tidal are apparently willing to shell out a ton of money for these exclusive deals. And as long as they remain an effective tool for driving subscriptions amid intensifying competition, the streaming platforms aren’t likely to stop offering them. Despite some controversy, the exclusivity approach seems to work for most artists: Drake was the most-streamed artist on Spotify this year, despite Views only being available on Apple Music when it debuted. Like Beyoncé’s Lemonade and Ocean’s Blond, Drake’s latest album was a massive success overall. That said, we should expect to see fewer of these deals next year. Streaming platforms, labels, and artists will use the tactic much more selectively to minimize fallout while still extracting whatever competitive value they can. Musicians Will Squirm As AI Gets Better At Making Music Have you ever seen a computer write a song? It’s nuts. Give IBM’s Watson a simple melody and define a mood, and the multi-talented artificial intelligence platform will churn out an original song that sounds like it was made by a person—albeit not an especially talented one. But it’s now possible to teach machines enough about the rules of music theory to let them compose their own music, complete with multiple instrumental layers and changes in key and tempo. The result isn’t something you’ll want to listen to on your daily commute, but it’s still early in the quest to teach computers how to make art. And it’s not just IBM that’s focused on this. Google’s Magenta project, announced in April 2016, is in the beginning stages of stretching the limits of machine learning to help computers understand—and eventually mimic—creative thinking. Like Watson, Magenta has already produced a rudimentary song of its own. Machines aren’t about to put artists out of work, but advances in artificial intelligence could make certain types of music easier and cheaper to create—video-game soundtracks or background music for a retail store, for instance—that would not require licensing or paying royalties. AI could also augment the creative process for flesh-and-blood songwriters. An artist stuck on writing the chorus of a song could tap into tools based on Watson or Magenta to autogenerate a few ideas. Next year, expect the technology to improve slightly and for more artists to catch wind of it. Some will see an exciting new creative opportunity. Others will cringe at the mere idea of it. New Answers (And Dollar Signs) For Artists The brief history of streaming’s rise has been accompanied by an often awkward question: How will artists fare? It’s a natural concern given the minuscule per-stream royalty rates offered under a model that’s still scaling to its full potential. There won’t be a silver bullet in 2017, but artists will see more reasons to be hopeful about the future because catering to artists has increasingly become a priority for streaming services. Apple Music and Tidal have famously made artist-friendliness a key tenet of their offerings—or at least of their marketing. In June 2016, Spotify hired former Lady Gaga manager Troy Carter to oversee its expanding artist relations initiatives. Middle-class artists might not be getting huge checks from Spotify, but many are finding new promotional value in landing on the service’s most popular playlists, whether they be hand-curated in-house or data-powered. Discover Weekly alone drove more than half of all listening for 8,000 artists in less than a year. Spotify is also building out more tools and services for artists and finding ways to tap into the passion— and disposable income—of super-fans. Meanwhile, Pandora is busy reshaping itself into a service that caters more directly to artists’ needs, be it with data, marketing tools for artists, or the ability to sell concert tickets directly to fans from within the app. For now, record labels still reap the lion’s share of revenue, but that balance of power is poised to shift. Between the platforms’ investment in artist relations and the growing slice of revenue being generated by streaming, musicians are bound to see new benefits. And streaming services, labels, and artists will all have to renegotiate their relationships with one another. Artists may soon be in a better position to demand more from their labels or, following Frank Ocean’s lead, sidestep the middlemen altogether—a prospect that could become easier for less-than-household names as the streaming industry’s artist-facing services mature. We’re also seeing promising signs outside of the all-you-can-stream model. In 2015, Bandcamp announced that it had paid out $100 million to artists since being founded in 2008. As 2016 winds down, that number is already up to $190 million, a number that suggests Bandcamp is booming. That’s not just good news for Bandcamp and the artists who use it to sell music and merchandise. It’s also a clear sign that music fans are perfectly happy to pay for music and support artists directly in the digital age. Amazon Will Become A Major Player In Music In 2016, the streaming battle was primarily framed as a competitive struggle between Apple and Spotify. That will continue in 2017, but while latecomers to the subscription game like Pandora and SoundCloud fight to amass bigger numbers, one company will have a relatively easy time: Amazon. Like Apple, Amazon has the advantage of being a giant tech company with a massive customer base to which it can market its music service. Its wildly successful Echo smart speaker is also a natural vehicle for a full-fledged music subscription service, and Alexa offers more voice control functionality to Amazon Music Unlimited subscribers than it does to users of other services like Spotify and Pandora. It’s also a cheaper option for many people: If you subscribe to Amazon Prime, Amazon’s music service is $8 per month. If you own an Echo or Echo Dot, you can get the service for $4 per month (although it will only work on that device). No other major subscription service has been able to dip below the standard $10 monthly price tag, making Amazon’s lower cost a unique competitive advantage. While it’s no Spotify, Amazon Music Unlimited launched as a perfectly decent, cross-platform music service. And the company is already starting to improve the service with more handcurated playlists and exclusive content deals like the one it recently signed with Garth Brooks. Like Apple and Google, Amazon can afford to invest in this area without much concern for profitability. Expect Amazon to nab quite a few subscribers pretty quickly. Next Wave Of Innovation: Virtual Reality Music execs might have been caught off guard by file-sharing and other technological innovations, but the resulting wounds have taught the industry a valuable defensive tactic: Sleep—to paraphrase Napster’s one-time archnemesis Metallica—with one eye open, lest it get blindsided by change yet again. If virtual reality is going to be as explosive as the experts predict (ballooning to nearly $30 billion in revenue by 2020), the music industry will be ready. Big names like Paul McCartney, U2, Björk, Coldplay, and Deadmau5 are just a few of the artists who have already embraced VR in the form of immersive music videos or live concerts that invite fans onstage. But since consumers are just starting to get acquainted with VR, the music industry has pumped the breaks as it waits for the market for hardware and software (and thus demand for immersive content) to catch up with its ambitions. It’s pretty unusual for the music industry to be ahead of the next wave of innovation, but that’s what’s happening with VR. There are already signs that VR will yield exciting developments for fans and the music industry. Immersive live streams of concerts, for instance, could evolve into a real source of revenue beyond the standard catalogs of recorded music. Music videos, music documentaries, and music-oriented video games can also take on new life in a world where virtual reality headsets are common. There are also interactive music visualizers, which turn songs—or even your own voice—into responsive animations that unfold in front of you. Then there’s the audio itself. For the best experience, immersive music environments will require engineers to mix songs in more spatially complex manners than standard stereo or even surround sound, which could pave the way for innovations in the way music is composed and produced. There could also be money in VR. It’s still early enough that artists and labels can start crafting business models around a simple but familiar logic: Give fans something meaningful and entertaining that they can’t get anywhere else (or easily pirate) and they just might give you their money. Sounds crazy, I know.

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