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« MusicThinkTank.com Weekly Recap: The Next Era of the Music Business & More | Main | 4 Emerging Trends in Social Media & How They’ll Impact The Music Industry »
Tuesday
Mar122013

The Next Era Of The Music Business

Regardless if you’re a musician or music consumer, your music life is about to change. Slowly but surely digital music distribution has been evolving from downloads to streaming, but that transition has been really picking up speed over the last 12 months. With Spotify leading the way thanks to reams of publicity, more and more consumers are finding that the joy of renting music beats owning it by a long shot.

While it’s been long rumored that Apple has their own streaming service up their sleeve, several developments reveal the change that is about to come.

First is the fact that Jimmy Iovine’s Daisy project (named after the first computer generated song) just received a $60 million injection from the likes of Warner Music Group’s owner Len Blavatnik, Fort Worth billionaire Lee Bass and Australian financier James Packer. This is a serious investment by some deep pockets that know what they’re doing and don’t like to lose. Then comes word that Apple’s Tim Cook recently took a meeting with Iovine to be briefed on the project. Does that mean a collaboration? We don’t know, but at the very least, Apple has a good working relationship with Iovine, since he was one of the first to sign Universal Music onto iTunes back in 2001. Together they’d be a powerhouse, a true 1200 pound gorilla. Chances are that Apple will chose to go it alone and just stay at 800 pounds though. It doesn’t need a partner, but if there’s something there worth buying, they have lots of money.

Then comes word that Google has been quietly making deals with all the major labels for their own YouTube-based subscription streaming service to be launched later in the year.

If all this were happening a couple of years ago we would’ve looked to only one of these prospective services to be left standing at some point, with the others falling by the wayside. But this is a different time, with the streaming business far more mature thanks to the likes of Spotify, Pandora, Rdio, Slacker, et al. It’s now probably possible that all of these new services survive if they’re at least half-way decent in their user operation and offerings.

This is definitely going to be a big win for consumers, with nearly an unlimited selection of songs available for a relatively small monthly fee (not sure what the price point will end up being, but $9.95 keeps being mentioned). Consumers are quickly seeing the advantages of renting their music. 

It will be a different story for artists and songwriters however. By now everyone knows how little the royalty can be from a stream, with stories abounding about income lost by the writer and artist. Although a full transition to streaming will be a godsend for the labels, with steady monthly income actually bolstering their bottom line, you can bet that not much of that will trickle down to the artists - at least at first.

It’s not going to happen overnight, but within a matter of time, you’ll see the entirety of the management and law categories of the music business devise a better way to get paid, and eventually force the labels to fall in line. And when that happens, it will trickle down to the DIYers who insist on doing it their way. To what degree this all takes place, we’ll have to wait and see.

While we’re currently in the era of Music 3.0, we’re about to see the next stage of the music business. Welcome to Music 3.5!

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You can find more music marketing tips on my Music 3.0 music industry blog. For music and production, check out my Big Picture production blog. You can also follow me on Twitter for daily blog updates.

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Reader Comments (2)

Well written post! I remember a time a few years back when many predicted music rental was the future. It appears they were right and Rhapsody was just a little too early to the party. Looking for to seeing what the Daisy Project brings.

March 12 | Unregistered CommenterKeith Stancil

On what basis do you assume the model will magically readjust itself over time to pay musicians better? So long as people who control the service providers are the same people who own the major labels (whether it be Iovine, or the labels having ownership shares as with Spotify) they will control prices and payments.
Streaming has been a godsend for the major label cartel, but its a death nail to the very notion of a middle class musician.

March 18 | Unregistered CommenterF.Rue

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