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The Future of the Music Business
Predictions
1. Today's pricing scheme of music-buying will be eroded by piracy and competition from other entertainment products, and will be shelved in less than 5 years. It will be replaced by a 'liquid' pricing system that incorporates subscriptions, bundles of various media types, multi-access charges, added-value services and -very likely- new, additional fair use provisions. CD prices will end up at around $5 USD per unit, and subscription services will combine both physical and virtual offerings. All in all, music consumption will eventually (in 10 years) bring in $60-$100 USD per person per year, with 80% of the population in the leading markets as active consumers. Not really a bleak vision!
2. The performing right organizations (PROs), as we know them, will vanish. Complete technology solutions comprised of watermarking / fingerprinting, DRM components, scanning, admin / accounting and instant payment solutions will do the job quicker, cheaper and with complete transparency. This may in fact be a good job for a GLOBAL PRO? New (or revamped) PROs may focus on promoting and marketing writers and performers but will share that turf with the publishers...
3. The traditional separation of Music Recording (Record Labels) and Music Publishing (Music Publishers) will fade away because new technologies and new markets require a uniform and concurrent exploitation of both rights in order to bring in substantial, recurring revenues. Music companies will become one-stop service providers to writers, artists and performers, as well as one-stop licensors to all kinds of buyers of their content. Still, most music companies will be smaller than today's operations, by employing cutting-edge technologies and outsourcing non-core tasks
4. Radio, as we know it, will become largely irrelevant because people will have access to carefully programmed and custom-cataloged music anywhere anytime. Just imagine a Music Choice ' type of service for your car (the prime turf for radio) - who would bother with radio? Except, of course, for the people-component in radio, and ' again ' the emotional connection that can be a very powerful attraction. This is the true opportunity for next-generation radio!
5. Retail: As a preview of what the future brings, visit Newbury Comics in Boston. The record store of tomorrow is not just about music, it's about culture, communication, community and the EXPERIENCE. Record retailers will no longer solely sell music; in fact, within 5 years music may not even be the main item any longer...
6. The music industry will start employing 'windowing' techniques that have been in place in the film business for a long time, and exploitation along a carefully designed chain of products will replace the current territorial strategies
7. Access will replace ownership. In 3 years, consumers will have access to 'their' music anytime anywhere and the physical possession of it will in fact be more of a handicap, or a pastime for collectors. Music will feel (and act) like water and music providers will become utilities...
8. Carefully marketed niche products will replace today's mass-market focus. Just like the Net has opened up the flow of previously premium-access-only news and information to anyone with a computer and Net connection, vaults of content that may only interest those 84,000 fans in those 23 countries will finally be available, and this content will be cherished, consumed, and paid for. Due to general globalization mega-trends, the rise of virtual communities, and the inevitable ubiquity of cheap and convenient content delivery technologies, music products designed for niche markets will be extremely successful. This is likely to start in 1-2 years and will build up revenues that, taken together, will eventually (within 15 years) surpass even the money brought in by the hits and major artists.
9. Multi-access to music will be the default setting, allowing consumers to 'fill-up' their players at gas stations, train stations and in coffee shops, using wireless and fixed media technologies. All devices will sooner or later be compatible with each other. Mobile phones, as we know them today, will cease to exist, and will be replaced by much more powerful mobile communication and entertainment solutions that are networked together
10. The Majors: legacy problems and the resulting legal nightmares, ivory-tower-thinking, nepotism, deeply ingrained inertia and perpetualized fear will continue to reign until revenues are down 25%-40%, giving rise to a whole new generation of young leaders from within the international music corporations that may turn the ship around. Painful for all involved parties but apparently necessary.
11. The Music Publishers: since the Net is essentially a gigantic publishing tool and all media is quickly becoming audio AND video, music publishers will do great, provided that they start utilizing technologies to further promote, place and exploit their catalogs rather then to stick their fingers into the bursting dam of outmoding business models that were invented and hard-wired before anyone knew what the word 'digital' meant.
12. Major artists will bank on their brands and will go direct to the consumers, using their own teams of marketing, branding and promotion experts. Once the major music cartels' cash-cows dry up (2-3 years), there will be little incentive to remain with them, and even up-and-coming new artists will partner with hot, next-generation marketing outfits that will do the job for them without requiring perpetual servitude contracts
13. Mechanical royalties as we know them today will cease to exist within 15 years, making place for profit- and revenue sharing, amalgamating with Performance royalties. Since CD prices will drop to $ 5 per unit, and unlimited 'all you can eat' subscription services will deliver music 24/7, the current music publishing fee structures are destined for extinction.
14. The fair use provisions effective in the legal structure today will prevail and may even be expanded, because in a 'new' system that is based on affordable membership schemes, open and multi-device access, fair pricing, the bundling of content offerings and sharing of content, extensive fair use options will be taken for granted.
15. The lifetime of copyright will be cut back to 15-25 years, to reflect the fast pace of innovation and cultural development. Music that then ends up in Public Domain will prove to be powerful driver of incremental revenues, and will inspire the creation of millions of derivative works. Copyright will no longer be defined as linear...
16. Consumers will not just pay for a music-only service, rather, they will look for exclusive previews, preferred access, deep catalog and programming advise and a direct connection to the artist. Adding value to the offering will be crucial.
17. Some Stars will be bigger than ever but maybe only for a week, and most likely only within designated niches. Instant virility driven by digital media technologies will propel new artists to instant fame within their target groups.
18. The Globalization of the Music Industry: In less than 25 years, the music business will be globally harmonized, and so will copyright law, rights administration and corresponding legislation. National rights organizations will band together internationally, and territorial legislation will be rendered almost meaningless.
19. Piracy will be rampant during the transition phase (3-5 years) but will eventually be 'put out of business' because illegitimate services will no longer have any advantages over the legit systems - this is how piracy will be stamped out in less than 10 years.
Next Week: The Future of the Music Business: Other Trends, Part 3 of 3.
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