Column: How Music Tech is Making it Easier — and Harder Than Ever — for Artists

Larry Miller

Larry Miller is a professor at NYU where he directs the undergraduate and graduate Music Business programs. He produces and hosts the Musonomics podcast.

Column: How Music Tech is Making it Easier — and Harder Than Ever — for Artists

For many musicians, the democratization of music production and distribution carried the promise of reaching multitudes of eager fans at the touch of an upload button.

Yet with over 40,000 new tracks being uploaded each day, creating a virtually infinite selection of music available on most streaming platforms, breaking through as an artist has in some ways become more difficult than ever, especially on the global stage.

It is certainly possible today for artists to create and self-distribute their music, gain a following and begin building a career. But there's a big difference between having access to the tools of music creation, distribution, and building a sustainable career and the potential to become a global superstar. And that's where modern record labels are best positioned to help.

So What Does a Music Label Do These Days?

Revenues from recorded music in the United States grew 13% in 2019 to $11.1 billion at estimated retail value.

Image from The Recording Industry Association of America's report on year end revenues for 2019.

Fact is, what record labels do has not changed much since the industry's digital transformation. Now, as ever, labels discover and develop artists, connect them with creative collaborators to make great records, promote and position them in the media and wherever fans go to get music and reward successful outcomes. Over the last decade or so, the digital transition has fundamentally changed how and when virtually every functional area of a record label is done.

One difference that touches every facet of a label's operation is the massive amounts of real-time discovery and consumption data. Label teams analyze thousands of global inputs: Facebook fans, Twitter followers, YouTube views, Instagram activity, Shazam queries and Wikipedia look-ups. That's on top of analyzing the daily tsunami of music service plays around the world. The end goal: to develop an agile, highly customized response plan for every track of an artist's release.

Corollary to all this data is how today's music fans discover and consume music. Many fans now listen to music via premium subscription services that give them access to tens of millions of tracks for less than the price of one CD per month, or in a "feels free" option of ad-supported delivery. Fans also access music by watching label-created visual content on a myriad of screens, large and small, over video channels and via social media. At the same time they may still buy CDs or vinyl records and listen to the radio. To properly synthesize and optimize all these inputs and extract actionable insights requires hands-on experience that is both broad and deep, relationships, investment and instant access to a global marketing and distribution network; that is, it requires boots on the ground. Lots of them.

Revenues from recorded music in the United States grew 13% in 2019 to $11.1 billion at estimated retail value, the fourth year in a row of double digit growth reflecting continued increases — primarily from paid subscription streaming services, which reached more than 60 million subscriptions in the United States and accounted for 80% of recorded music revenue.

To put these numbers in a global perspective, as recently as 2018 and with streaming growth surging in developed markets, the worldwide recorded music business generated not quite half the peak revenues achieved in 1999 on an inflation-adjusted basis. CD sales crashed after 1999 with the launch of Napster and other illegal peer-to-peer file trading services, all of which were eventually litigated out of existence. The growth of iTunes downloads beginning in 2003 mitigated the decline of CD sales; Spotify didn't enter the U.S. market until 2011, the same year global revenues returned to growth after over a decade of painful decline. Midia Research pegged the 2019 global music industry at $76.2 billion including recorded music, publishing, live music, merchandising and sponsorships.

And just as the mode of consumer listening has shifted from mostly physical products and permanent downloads to on-demand streams, every aspect of label operations has reoriented toward a streaming-first consumption model and an always-on consumer mindset. The business of minting hits is no longer narrowly based on the 20th century model of maximizing short-term campaign outcomes for scarce broadcast radio slots or displays in retail stores. Every label function is now organized around fighting for a share of the attention economy, where consumers have unlimited access and choice, but not unlimited time.

Welcome to the Age of the Artist

The Age of the Artist

Photo by @plqml // felipe pelaquim on Unsplash

Today, an artist's decision to partner with a label is a choice, not a requirement. The expanding galaxy of startups designed to help the DIY artist record, distribute, and market digital music has given artists more options to stay independent longer, and enables some artists to make a sustainable living while building a fan base. Every musician starts out as an independent, DIY project. When they attract the attention of a record label, whether indie or major, they may be in a very different negotiating position than a decade or so ago. In this way, the point at which labels interact with artists has largely shifted to a point that's further along an artist's development.

Although labels continued to invest in developing and breaking new artists during the industry's downturn following an explosion of file sharing led to the collapse of the CD earlier this century, the improvement in industry revenue, driven by the growth of subscriptions to streaming services, is being re-invested in A&R.

Two years ago, 12% more artists signed to major label rosters for the first time as compared with the end of 2014. I'll be doing research to update this data later this year, but all signs point to further growth in artist signings. At the same time, independent artists are the fastest-growing segment in the music economy, so much so that industry analyst Mark Mulligan has dubbed the 2020s The Age of the Artist, a fundamental departure from previous decades/eras defined by a mode of distribution or packaged media format.

Major labels understand it is in their interest to maintain a front-row seat to the edge of innovation through various approaches. For example, Warner Music's WMG Boost invests directly in early stage companies; Universal's Accelerator Engagement Network invests through top accelerators located in innovation hubs around the world. But as the world's largest music-based entertainment companies and guardians of a century of the world's most popular music, their attention is focused elsewhere.

Where Is the Investment in New Music Technology Going?

Where Is the Investment in New Music Technology Going?

Photo by James Owen on Unsplash

So where exactly is the innovation occurring? The current cohort of international startup competitions like MidemLab and those receiving support from top accelerators like L.A.'s Techstars Music or Abbey Road Red fit into an emerging post-pandemic investment pattern.

  1. Creator tools. There is a mind-numbing array of unbundled offerings for artists to support collaboration, production and mastering, funding and financial management, distribution, marketing and promotion. A generation of data insight and analytics startups were acquired by the majors along with Spotify, Apple Music and Pandora. HiFi, a new entrant in financial management and transparency, was launched with $53 million in backing 'to financially empower the creative class.'
  2. Live streaming and virtual events. The live concert business came to a screeching halt to mid-March. Touring represents 70 – 80% of revenue for many artists. Virtually no one expects a meaningful restart of this segment until 2021. And although live streaming and virtual events are not a substitute for the live concert experience, this trend is likely to stay with us even after the pandemic recedes.
  3. The New Merch – In China, Tencent Music has done a spectacular job proving music fans will pay for virtual goods, gifts and currencies – at scale. This is especially noteworthy in a market not known for generating revenue directly from the sale of recorded music. Now, the West is paying attention. Opportunities abound in limited edition merchandise, premium chat services, virtual merchandise and much more.

Over the last two decades, the music industry has faced extreme disruption as digital services were born and entered the mainstream. Independent and unsigned artists have a myriad of options to self-release their music. While some musicians have found sustainable success without a label's backing, there are certain things that only a label can do, particularly for artists with global ambition. Opportunities for innovation and value creation are distributed across the music industry value chain, especially in the areas of creator tools, live streaming and monetizing fandom. It's no secret that many of the most exciting startups envisioning the way music will be created and experienced are in L.A. today.

Larry Miller is a professor at NYU where he directs the undergraduate and graduate Music Business programs. He produces and hosts the Musonomics podcast.

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Genies Wants To Help Creators Build ‘Avatar Ecosystems’

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

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Here's What To Expect At LA Tech Week

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Here's What To Expect At LA Tech Week

LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

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PCH Driven: Director Jason Wise Talks Wine, Documentaries, and His New Indie Streaming Service SOMMTV

Jamie Williams
­Jamie Williams is the host of the “PCH Driven” podcast, a show about Southern California entrepreneurs, innovators and its driven leaders on their road to success. The series celebrates and reveals the wonders of the human spirit and explores the motivations behind what drives us.
Jason Wise holding wine glass
Image courtesy of Jason Wise

Jason Wise may still consider himself a little kid, but the 33-year-old filmmaker is building an IMDB page that rivals colleagues twice his age.

As the director behind SOMM, SOMM2, SOMM3, and the upcoming SOMM4, Wise has made a career producing award-winning documentary films that peer deep into the wine industry in Southern California and around the world.

On this episode of the PCH Driven podcast, he talks about life growing up in Cleveland as a horrible student, filmmaking, Los Angeles and his latest entrepreneurial endeavor: A streaming service called SOMMTV that features–what else?–documentaries about wine.

The conversation covers some serious ground, but the themes of wine and film work to anchor the discussion, and Wise dispenses bits of sage filmmaking advice.

“With a documentary you can just start filming right now,” he says. “That’s how SOMM came about. I got tossed into that world during the frustration of trying to make a different film, and I just started filming it, because no one could stop me because I was paying for it myself. That’s the thing with docs,” or “The good thing about SOMM is that you can explain it in one sentence: ‘The hardest test in the world is about wine, and you’ve never heard about it.’”

…Or at least maybe you hadn’t before he made his first film. Now with three SOMM documentaries under his belt, Wise is nearing completion of “SOMM4: Cup of Salvation,” which examines the history of wine’s relationship with religion. Wise says it’s “a wild film,” that spans multiple countries, the Vatican and even an active warzone. As he puts it, the idea is to show that “wine is about every subject,” rather than “every subject is about wine.”

For Wise, the transition to launching his own streaming service came out of his frustration with existing platforms holding too much power over the value of the content he produces.

“Do we want Netflix to tell us what our projects are worth or do we want the audience to do that?” he asks.

But unlike giants in the space, SOMMTV has adopted a gradual approach of just adding small bits of content as they develop. Without the need to license 500 or 1,000 hours of programming, Wise has been able to basically bootstrap SOMMTV and provide short form content and other more experimental offerings that typically get passed over by the Hulus and Disneys of the world.

So far, he says, the experiment is working, and now Wise is looking to raise some serious capital to keep up with the voracious appetites of his subscribers.

“Send those VCs my way,” Wise jokes.

Subscribe to PCH Driven on Apple, Stitcher, Spotify, iHeart, Google or wherever you get your podcasts.

dot.LA reporter David Shultz contributed to this report.