How will emerging technology transform the sector?
When you think of the entertainment industry, you imagine film, gaming, TV and perhaps even theatre. Music is probably lower down the list. Although the music industry is worth an impressive $15 billion USD alone, it’s sometimes easy to forget that it’s a huge branch of entertainment. In a 2016 report by IFPI, however, it was found that music consumption is growing steadily worldwide. Alongside this, it was found that 45% of revenue now comes from digital sales, compared with 39% for physical sales. As music becomes increasingly digitalised, so does the technology used to distribute it. This is encouraging startups to focus on music as a stand-alone industry rather than as a sub-division of entertainment, which is helping the sector to grow even more. But what kinds of new tech are now being used in the industry, and how will they change the way that people experience music?
Last year, rock band Kasabian partnered up with London based VR company Visualise to create a virtual gig experience. The performance could be viewed via a headset or in a web browser, giving fans the chance to get as close to the band as possible without actually being present. There’s also a DIY element here – a recent advert from Samsung shows a father awkwardly recording a teen pop concert on a Gear 360 camera so that his daughter, who’s too ill to go, can experience it in Virtual Reality using a Gear VR headset. New sensory VR features (like touch) will make this kind of experience even more immersive. Another novel development has been pioneered by a Dublin-based startup called Firstage. The company records artists in front of a green screen and then shares the video via an Augmented Reality smartphone app, which lets the viewer watch their favourite bands and soloists perform on their kitchen table. While this all sounds very fun, there’s a less obvious branch of innovative tech that is proving to be necessary in the ever-expanding digital music environment. Digital sales require digital transactions, and that’s where blockchain comes in. There are so many people involved in the creation of a track, and blockchain ensures that the right amount is paid to the right contributors. There can often be underhand dealings in distribution, but the transparency of the online currency makes this much harder.
How will technology disrupt the music industry?
Digitalisation is affecting music in a big way. In 2016, total global revenues for the music industry grew by around 3%, whereas digital revenues rose by over 10%. As music moves online, so does the consumer experience. This is already clear from the popularity of streaming sites like Spotify. Through technology, music is becoming far more accessible for those who can’t readily go and watch their favourite artists. VR and AR in particular have made music less exclusive, which on the one hand is positively disruptive as it gives musicians the valuable exposure they need to be successful. It can be difficult for artists to physically reach a wider audience, but with VR and AR, the bands and solo musicians can be in more places than one. On the other hand, this accessibility could potentially backfire. Why deal with the hassle of organising travel and accommodation when you could experience the performance from the comfort of your own home? Giving fans the ability to experience a music event using a smartphone or a headset could easily discourage them from attending actual concerts, which is ultimately going to affect the band’s revenues. There’s definitely scope for disruption caused by VR and AR, but it’s digital currencies that are seriously set to change things. The traceability of blockchain, once adopted, will force sales to become open and honest, meaning that all contributors to a certain record or event will receive the appropriate amount. There are clear advantages to using blockchain, but it doesn’t mean the immediate death of physical sales because mass adoption will take time. However, discussions over digital currencies serve as a warning to companies like HMV. . . just look at what happened to Blockbuster as sites like Netflix took over.
Challenges and new commercial opportunities. . .
It’s an exciting time to be in the music industry, but as much as new tech presents commercial opportunities, it also throws up challenges for businesses. For example, virtual and augmented experiences could have a serious negative effect on fan turnout at physical events. The most obvious response would be to find a way to generate revenues from VR performances, perhaps by selling them in the app store for instance. Taking sales out of the physical sphere can lead to embezzlement, as transactions are less visual. Using blockchain to make these sales more transparent will help contributors receive the right amount of revenue for their work, which is ultimately a good thing for honest businesses – embezzlers, not so much. As music moves further away from physical sales, record labels and distributors are faced, yet again, with the Innovator’s Dilemma. Businesses that are struggling with the decision to digitalise should look to the fall of Blockbuster at the hands of online streaming as an example of what could happen if they don’t change their strategies.
There will always be dedicated music fans that stand by vinyl records, but the future of music is mobile, digital and hugely accessible – and the record labels and artists that embrace it now will make the most of this, as well as standing out from the crowd. While it’s easy to be sceptical about the use of digital currencies in the music industry, it’s worth bearing in mind that entertainment giant Disney just developed their own blockchain platform called Dragonchain. As popular as music is, there’s still so much scope for more innovation. Think 3D printed instruments and AI predictions of what sort of music you might like, for example. In short, technology is changing the way that music is experienced, and it will continue to do so with the help of innovative startups and consumer demand.
Will digital music sales kill physical sales? Is Blockchain the future of transactions in the industry? What other innovative technologies could affect the way we experience music? Share your thoughts and opinions.