Because of COVID-19, the music business will be forced to shift. Here are 10 ways the coronavirus will change the music industry.
There isn’t a business in the world that won’t change in some material way as a result of COVID-19. The music industry is no exception. Riding high on strong revenues leading into the pandemic, the coronavirus hit the music industry hard in March as streaming numbers declined and the live concert revenue stream was shuttered as a result of social distancing and quarantine. Like much of the business world, music is still learning how to function and drive revenue in a new normal, one where being shoulder-to-shoulder at a concert is not possible and fans aren’t as concerned with the hottest new artist as much as they are figuring out how to safely buy groceries.
Most societal shifts or major world events tend to bring about innovation and new ideas. During the great recession, companies like Uber were founded serving the needs for alternate, cost-effective modes of transportation. Or go way back to the 1920s when the initial wave of networked homes became a thing. This pandemic will be another time of innovation and presents a great opportunity for the music business. This will be an opportunity for the industry to figure out ways to bring artists closer to fans — without actually bringing them physically closer — and new ways to generate excitement around music and ensuring the live concert experience remains albeit in a different form. It won’t be easy but the music business has been presented with a unique opportunity to shift its business forward and ensure those soaring revenues grow and the business of music is healthy for years to come.
Here are 10 ways the coronavirus will change the music industry.
1. AI-Driven Music Will Surge
Artificial Intelligence-driven music-making has been around for many years and was recently back in the news as OpenAI, a research laboratory based in San Francisco. The company unveiled Jukebox, an algorithmic system capable of generating songs in the style of popular artists. The tool was so effective that AI-generated readings and songs in the style of JAY-Z were subject to a takedown notice from Roc Nation.
It didn’t work.
While the job of the modern-day A&R has changed dramatically — with the bulk of their time spent pouring over streaming data to determine the next “big thing” — even a sure-fire streaming bet can still bring risk and substantial upfront investment. For the music business, taking the risk out of investing in new artists seems to make perfect sense. Figure out what artists and songs people are loving today, get the formula, and make more of them. It’s terrible for the art but more of a reality in the future as the bottom line becomes more important than ever.
2. Artists Will Gravitate Towards More Artist Friendly Streaming Platforms
As the world’s largest subscription music streaming service, Spotify has the audience and the muscle to give artists the opportunity to grow their career and fanbase. Where the service falters, however, is on the payout side of things. Using a simple calculation, 100,000 streams on Spotify will net an artist, on average, $437. The Spotify per-stream rate is a static rate. Compare this to the artist-friendly Audiomack platform where artists in its AMP (Audiomack Monetization Program) earn per-stream payouts from $.0007 – $.001. The revenue pool model of Audiomack ensures that as the platform’s ad and subscription revenue grows with the per-stream payout rate.
As the world of touring changes and the live concert revenue stream likely to be a challenge for many more months to come, artists are gravitating towards more artist-friendly platforms that provide a stronger link to the fan as well. Take for example Bandcamp’s initiative: One day a month, platform waives its revenue share on music and merch sales raising over $4 million for artists on the platform. Due to it not being a subscription-based platform, Bandcamp has the flexibility to reward artists in a way that Spotify and other streaming services don’t.
As Spotify continues to scale, and diversify, it is quickly becoming the McDonald’s of music streaming. Not a bad position to be in if you’re a shareholder, but for artists, the sheer volume of music flowing onto the platform makes it challenging to break through the noise. And, even when they do, the paltry payouts don’t come anywhere near offsetting lost touring revenue.
3. Less Fan and Artist Physical Interaction
News reports suggest that large scale concerts may not return at all in 2020 as waves of cancellations and postponements, including major summer festivals and concert tours continue to be announced. One of the most lucrative elements of the live concert business over the past several years have been artist meet-and-greet packages. These premium concert experiences typically include a ticket close to the stage, exclusive merchandise, special VIP entrance to the venue, and more. They also give the fan, usually a super-fan of the artist, the opportunity to meet their favorite artist or band before or after the show. The interactions are usually limited to light banter and a photo opportunity but these typically happen at close range, many times with the artist and fun hugging or shaking hands. Even before the coronavirus reared its ugly head, fan meet and greets were under increased scrutiny following the 2016 lethal shooting of Voice singer Christina Grimmie at a meet-and-greet. And while there is no question meet-and-greets won’t be happening during the active pandemic — even after a vaccine is in place — it feels as if the closeness between fan and artist brought on by these interactions may be abandoned for good, replaced with more exclusive, social-driven interactions. Instead of an in-person meet-and-greet, the artist may give an exclusive Facetime call to a fan or give temporary texting access to the fan to share messages back and forth.
It’s unlikely backstage fan access in real-life will be the norm going forward.
4. The Internet Will Run the Industry
Unless you’ve been living under a socially distanced rock, you’ve heard of the wildly popular Instagram Live battle series Verzuz launched by Swizz Beatz and Timbaland. Matching up legendary artists and producers like DJ Premier and RZA or Ludacris and Nelly in song-for-song battles all carried out on IG Live has drawn hundreds of thousands of viewers for each battle. And as quickly as someone can say quarantine, Swizz and Timbaland have built a powerful brand with fans sharing ideas around the next battle and generating substantial streaming spikes for the artists involved.
Verzuz is only one example of how the coronavirus resulted in music finding a more captive and stronger social audience than ever. Who can forget D-Nice’s early iterations of Club Quarantine or how more artists than ever were going live and interacting with fans? Quarantine has not only forced artists and the music business to innovate but it has also forced fans to enjoy music and their favorite artists in new ways.
5. There Will Be a Need to Bring Tangible Value Back to Music
In the early days of the global pandemic, data showed that music streaming was down. And while the argument can be made that this was a product of people confronting a once-in-a-lifetime situation that no one had lived through before, there was something else at play as well. In the world of streaming — and an almost evaporated physical music product world (vinyl aside) — music is more important to our daily routine now than it is an integral part of the functioning of our lives. But the emotional hold music once had on its listener has waned as music became a thing you heard rather than held.
Those early declines that show the emotional and physical attachment to music has changed. The music industry needs to figure out new, innovative ways for people to feel and touch music again. Is it vinyl that will ultimately carry the flag forward? Or a new format that will better speak to today’s TikTok audience? Or something nostalgia related like CDs that make a ferocious comeback? The full story is yet to be told but the pandemic has been a hard lesson for the music business that without a true anchored attachment to people’s lives, a business may fall by the wayside.
6. There Will Be Opportunity for More Exclusive Fan Experiences