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Digital Music War Chapter 14 ... Part Three

A Presentation by Marc Geiger
by

Alex Bramwell

on 9 February 2017

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Transcript of Digital Music War Chapter 14 ... Part Three

In the beginning there were physical formats,
and everyone was happy...
Then the internet came and the music hungry and unsatisfied said…I WANT MY MUSIC ON MY COMPUTER DAMMIT. And so the crumbling of the industry began and the war took all the money and all their property (except live shows).
Digital music starvation then came about in the mid 90s when unsatisfied music fans wanted more music at much cheaper pricing thru the net. To get their music, these music hungry had to fight through nasty file sizes, slow ripping with CD burners, expensive hard drive upgrades, TERRIBLE bandwidth and death by stealing.
Then came more plagues of digital rights management, Napster, MP3.com, peer to peer services, bad interfaces, larger file sizes, more slow bandwidth, high priced files, label and publisher wars, lawsuits, major label consolidation, copyright infringement, incomplete libraries and confusion, confusion, confusion ... just to get to where we currently are in our story.
So now we begin Chapter 14 of The Great War of Digital Music, titled
So now we begin Chapter 14 of The Great War of Digital Music, titled
“The Giants Save the Day”
Order is restored and the world shuts up and watches.
Order is restored and the world shuts up and watches.
The Giants (today)
Pandora
Apple Music
Spotify
Amazon
Netflix
Google / YouTube
Facebook
Soundcloud
SiriusXM
iHeartMedia
Tencent / QQ
Verizon
Microsoft
The Giants (today)
Pandora
Apple Music
Spotify
Amazon
Netflix
Google / YouTube
Facebook
Soundcloud
SiriusXM
iHeartMedia
Tencent / QQ
Verizon
Microsoft
Featuring:
In Smaller Roles (the Outsiders)
Napster / Rhapsody
Sonos
Shazam
Snapchat
Deezer
Roku
Twitch
Tidal
Saavn
In Smaller Roles (the Outsiders)
Napster / Rhapsody
Sonos
Shazam
Snapchat
Deezer
Roku
Twitch
Tidal
Saavn
As we enter the 22nd year of the war, storm clouds brew over the landscape as the giants trudge onto the field. They bring with them other services and armies of video, film, TV, video games, books, and more creating further blended subscription offerings and hard to understand pricing. They also bring a host of other businesses which makes this war seem quite petite and insignificant to the giants while millions of music hungry stare at the music equivalents of Godzilla, King Kong, and Mothra hoping they give a damn and make a good product… One thing is for certain, for both consumers and content suppliers -
confusion runs amok.
Here’s a snapshot of what is STILL to be figured out over the next few years, and many have not even begun:
• Content libraries evolving, filling out and blending media types

• Pricing… strategies, tiers, windows and more.

• Metadata cleanup - just go try to look at the Peter Gabriel or Calvin Harris sections….

• Interfaces and personalized, recommendations just beginning. Even history files are new in this arena

• Human curation and point of view curation just beginning-Zane Lowe Apple

• Publishers battle labels for higher royalties and restructure songwriter compensation

• Copyright reforms bringing laws into a 21st century reality
The battle is over who has the true power to scale users. Using their weaponry of 100 million to 1 billion plus audiences, internal payment systems and blended billing, the giants hope to convert their loyal minions to pay fees for a variety of content services.
In any case, the Giants, the contenders plus the telcos and other giants who are still showing dumb and slow are going into yet another period of unstable and evolving plans, ensuring more lemming-like behavior from competitors...
A few things for sure in this battle:
• Streaming all content (maybe not books) has won
• Vinyl is the physical preferred format for hard copy types
• $10 / month is still a fight
• Windowing and tiering has not commenced, still in the great try it before you buy it era
• No one understands blended offerings yet
• The industry has no idea where the money is coming, going, nor do the creators
• Big equity and advances taken by the Copyright Giants keeps on keepin' on
• The Flattening or “E Trade ization” of collections has begun
• The music industry jumped on board and finally stopped whining after 100 million users started paying - now it's money time!
• Charts are all changing and consumption is all over the place and untracked
• Okay, 1 trillion tracks streamed so everyone can calm down, this is going to work
In any case, the next few years will be marked by rapid user growth, refinement of offerings, personalized interfaces, expanding content libraries, confusion and complaining over money and LOTS and LOTS of action from the players above.
GET READY FOR
GOOD TIMES
1. M&A and further consolidation ramps up
- Netflix buys Spotify
- Napster / Rhapsody sells to Verizon
- Tidal finishes with Sprint
- Amazon launches and crushes with voice activation
- Google / YouTube remains conflicted and doesn’t get it right
- Pandora sells to Sirius / John Malone
- Shazam goes to ?
- Deezer and Saavn sell to QQ Music / Tencent
These Things Happen Next...
2. Users adopt streaming and the numbers really really grow large
- 500 million to 1 billion paying users coming
- Money will be HUGE but confusing (see bundled services)
- Ancillaries like live touring, merchandise and advertising grow alongside
- Industry goes into the biggest golden age yet
3. The financial rebuilding begins

- All this new money from all these digital sources plus all the log files (usage) cannot be ingested by current systems
- New systems need to be all rights and royalties, worldwide, real time, transparent in one report
- No one has processing and reporting systems
- Banks did this and converted into E Trade, Schwab, TD Ameritrade and other digital money businesses. The E-Tradization of the music business
- 5-10 years to build the right systems to track all the revenue and distribute properly
- Disruptors building for he new age (Kobalt and many others) combine or kill off old collection societies and PRO’s
4. The start of bundled services
- Will contain all media choices like Apple TV or Amazon prime
- Music, video, TV, Films, photos, Video Games, Books, Podcasts, YouTube, OTT and more
- Every major player will be competing
- Replaces the cable/digital bundle with more value, customization and well priced
- Churn will be low, users will be in massive content gardens
5. Entertainment Executives infiltrate digital companies
- Every company will have to staff up to be competitive
- Jimmy, Larry, Zane and Trent at Apple Music
- Troy Carter at Spotify
- Jay-Z at Tidal
-Lyor Cohen at YouTube
- ?????? at Amazon, Verizon, Snapchat, QQ, more
Good news for all of you here today...
- More to sort out than ever before and still changing dynamic rules
- M&A and Bundled services and the financial restructuring will be torturous negotiations
- Copyright, collections, reporting still a mess
- Usage and tracking harder than ever
- Also bigger and worth more than ever
- Mash ups, partial usage still to be sorted out, tracked and collected
- New deal structures keep evolving as the business continues to morph and change
- Multiple options available for finance and distribution
- More than ever before and they have reach and scale
- Self publishing, ownership and other deals more frequent than ever
- Revenue share deals available with all kinds of partners
- Independent artist funds proliferating with different models
- Clients more in need of advice and expertise than ever before - especially around digital
- Publishers, labels and digital companies soon to be flush with cash
Full transcript