by Zac Shaw

Streaming Music

There are two kinds of artists: those who made more profitable royalties in the pre-streaming era, and those who didn’t. The former are a loudly vocal minority, and will not let up in 2014. But most musicians are waking up to bigger and more frequent checks from streaming music. Popular EDM artist Avicii is already making more money from streaming than from sales, a trend that will only continue to grow. As this long tail slowly shakes itself awake, Spotify, Pandora and the like will also continue growing, but will continue to face profitability issues in light of exorbitant major label licensing fees. A bunch of awesome streaming music startups will be shut down in their prime from these major label licensing pressures (like Turntable.fm). Offsetting this bummer is the trend of artists opening their own fan subscription services, rendering the silly streaming music debate mostly moot (more on that below).

Crowdfunding

Crowdfunding is a bigger deal than most people imagine. We continue to believe crowdfunding will be a cornerstone of the way many things will be produced in the 21st century. Like 3D printing and nanotechnology, we are at the beginning of an exciting revolution enabled by technology. Music is perhaps one of the best suited art forms for crowdfunding, because albums have never been cheaper to produce and provide a convenient reward to anchor a campaign on. We’ll see Pledge Music become a major player this year, legitimizing music crowdfunding by touting projects by big-name acts. Well-established bands like The Hold Steady, The Presidents of the United States of America and Sevendust have already well exceeded their six-figure goals. Pledge Music is unique in that they don’t generally publish the dollar amount being raised by the artist, only a percentage toward goal. This makes it about the music and not the money, something that appeals to business-phobic musicians. Kickstarter will continue to reign supreme, though Indiegogo, Rockethub and a slew of other competitors will grow by taking the risk on bands that can’t raise the full project amount. But that’s not even the most exciting crowdfunding-related prediction…

Fan Subscription Services

We believe 2014 will go down in music business history as the year artists started opening their own fan subscription services. Part streaming music, part crowdfunding and part fan club, these hybrid platforms are currently being offered by acts like Rabbit Rabbit and Deadmau5. It seems like every week there’s a new artist that is launching one. The common thread seems to be the idea of a very low monthly subscription price ($1-$5), exclusive packages of monthly content (singles, videos, text, art, etc.) and a website where fans can log in, view said content, and interact with the band and each other. Deadmau5 even teaches EDM production to his fans with livestreams of him in the studio composing tracks. It’s going to be an exciting new world for artists, which leads me to…

Meet the New Music Industry

We’re firm believers that in 5-10 years, many artists will have their own monetized interactive channels of content, and a new industry will pop up around curating these channels. The major labels own ~70% of the world’s music rights, and largely control the industry and music in general by exploiting those rights. They legislate effectively perpetual copyright terms to protect their profits and stifle the public domain. Increasingly, artists will reject participating in this racket in favor of controlling their own careers. A similar movement is starting to take shape across all manner of creative professions. It will become more profitable to own your rights, rather then sell to a third party for exploitation, particularly because the cost of music marketing and production will have approached historic lows. The biggest barrier to this change is the market monopoly the major labels enjoy, and the dominating influence the entertainment industry brings to bear on copyright law. Yet we are witnessing a growing resistance to copyright maximalism. Consumers have always had the choice of supporting the artist directly… in the future, the artist will gain this choice because there will be no value the label can provide that rivals direct access to their fans via their owned, subscription-based, exclusive content and interaction channel.