Music Business

2014: Year of the Streaming Service?

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January 31 marked the Lunar New Year, ushering in the Year of the Horse. It will also be the "Year of the Streaming Service."

As I call it, the "normalization" of streaming will accelerate this year, as the continued proliferation of services drives more and more people to adopt streaming as their preferred method of consuming music. I think in many ways we're talking about a significant change in consumption patterns, and so it has taken time for people to come around to the idea. The marketplace is reaching critical mass and smartphone penetration is driving things. Consumers are increasingly aware of how they can use their phone as an entertainment device and are much more willing to change their behavior. (Spotify's recent change in allowing streaming to mobile devices as part of their free offering is a sign. To make money from their free service, Spotify must serve ads to their users, and all those eyeballs are now looking at mobile devices.)

With January's launch of the Beats Music service and the coming launch of Deezer in the US, as well as the continued evolution of Spotify, Rdio, Pandora, Slacker, iTunes Radio and Google Play, consumers will have more and more choices. Those choices will increase competition amongst all the services, forcing them to continue to innovate, tweaking their offerings to attract and retain customers. Given that customers are now more inclined to adopt a streaming service, they are likely to try several on for size and settle on one they feel satisfies their needs. In turn, those customers will get a big say in which features will become standard (as they vote with their ears and their dollars). This process, coupled with how the services manage their costs, will determine which can become dominate in the space.

All of this means that 2014 will be a pivotal year in the evolution of streaming services.

Artist development is not dead

At the recent Jazz Connect conference in New York, I checked out a discussion that my client Dave Douglas took part in as a panelist called "The New Paradigm for Record Labels". While it turned out to be a lively conversation on the state of independent jazz record labels, one question from the moderator, Jim Cuomo, stuck out for me.

To paraphrase Jim (who's the General Manager of eOne Distribution): "How can artist development remain relevant today?"

I thought this was a striking comment when the source and context is considered.

Is artist development dead?

Much has been written about how artist development no longer seems to be a priority for labels. It once was, and I witnessed things change during my career in the majors. It's a lengthy, expensive, messy (and therefore risky) process. Given the increasing short-term, bottom-line driven attitude of many corporations, it's no wonder they no longer have a place for it in their business plans.

The important aspect here—and what I think that Cuomo was trying to get at—is that artist development isn't unimportant just because the traditional record company may no longer see it as part of their business. In practice, "artist development" is a metaphor for an artist's career and the steps they take as they progress both creatively and commercially. That certainly isn't any less important for any artist!

Why is it relevant?

Each new project an artist undertakes (whether it's an album or a tour or anything) builds on the last. Each needs to be taken in the context of what was done previously and what is planned for the future. Careers are cumulative. Each experience informs future decisions; each decision relies on past experience.

What this means in the marketplace is that any investment an artist makes (in time, money or both) cannot be discounted as they prepare for coming projects. To record and release an album or book and perform a tour requires an investment in educating an audience (whether consumer or otherwise) and realizing how that investment is a building block for future activities.

This approach to an artist's career requires the acknowledgement that lots of third parties are responsible (at least in part) for an artist's success, and that they see their time and effort as an investment too. Again, in the marketplace, this means that for every minute an artist spends engaging a consumer or developing a relationship with a business partner is a minute that consumer or partner could have spent with somebody else. Nobody can afford to have their time wasted and their time—and time is money—should always be viewed as an investment which nobody wants to risk losing.

The bottom line.

What all of this means is that when we talk about "artist development" we're not just talking about an insular process whereby an artist builds a career on their own, but a more expansive one that involves others. After all, artists owe a part of their success to those "others": not just fans, but also the business partners who put them in front of fans. Any investment that is made on the artists' behalf must be protected. It's important for artists to realize that, as by doing so, they can build stronger relationships and therefore a longer, more fulfilling career.

Jim spoke from the perspective of a distribution partner, one of the most important and powerful partners an artist can have. His question was actually a suggestion, even a command. Artist development is certainly not dead, and certainly no less relevant now than in the past. What is relevant is how an artist goes about the process in the current marketplace.

If you're an artist, you want motivated, engaged fans and partners on your side. Given them what they want, including the assurance that their efforts won't be wasted. What could be any less relevant than that?