Why the music industry needs to listen and learn

Exchanging money for goods is a fundamental pillar of civilization, so ingrained in our psyche that it is protected by law as well as religious doctrine (“Thou shalt not…”). It has been the bedrock of our economy for millenium, and without it trade could not exist, industries could never develop, and society itself could not be taxed nor governed.

For most of human history, goods have been physical entities. Take the humble orange, for example. Its supply is limited meaning that if you buy one, the shopkeeper has one less. Once you hand over the money possession changes hands and the transaction is completed. However, a new class of products has emerged that disrupts the entire tried and trusted concept — digital goods.

Digital music has upended the system

In 1997, the MP3, the first digital consumer product, entered the market and shattered the rules of the game. It ushered in an era where music;

● can be sold or given away without losing possession of it.

● can be infinitely replicated, each copy identical to the original.

● is easily acquired and shared by anyone, anywhere without purchasing it.

● can be consumed an unlimited number of times, while remaining unchanged in both quantity and quality.

● impedes collection of information about who distributed and consumed it, where, and how often.

● continuously eludes attempts to harness its profitability.

Put simply, the MP3 and it’s streaming service successor have created the equivalent of an unlocked backdoor to the sweet shop. And it’s no coincidence that the music industry’s revenues are down by over 50% since the peak in 2000, largely due to the unlicensed, untracked broadcast and consumption of music, although new platforms such as iTunes and Spotify have reclaimed some lost territory.

The music industry needs to reinvent itself

Digital music has caused huge disruption in a business that hundreds of thousands of people globally rely on for their living. And it is a business that relies on people first and foremost. The music industry requires constant innovation, creativity and a steady output of products that are extremely time consuming and difficult to manufacture; just imagine the thousands of writers and musicians out there toiling away and competing with each other to produce the rarest of things; the hit song.

It’s clear that the current state of affairs is unsustainable. Unlicensed, untracked broadcast and consumption of music has, and continues to hurt the business. And it’s not just the huge loss of revenues. The fact that the industry doesn’t know who is listening, where and when; this has impacted the market knowledge needed to plan and focus effectively on the best opportunities. Worse still, it means the barrier to entry for thousands of writers and musicians is far higher. Why? Because record labels are forced to focus on big-name artists to satisfy the economics of a system where half of all music is consumed without generating revenue, and the other half consists mainly of the most popular singles that sell for less than a couple dollars apiece.

Even the big-names have taken a hit. Some 15 years ago, performers earned most of their income from album sales. Today, they have to tour constantly to earn a buck, which taxes both mental and physical health considerably. Here are just some recent examples; “Fleetwood Mac postpones tour dates and cancels Jazz Fest performance due to Stevie Nicks’ illness”, “Ozzy Osbourne cancels tour dates to recover from pneumonia”, “Justin Timberlake cancels remaining tour dates due to bruised vocal chords”, “Fever Ray cancels tour citing anxiety disorder”.

But why should music consumers care? First there’s the fairness angle. If you do a job you would expect fair pay for your work, right? Why should those in the music industry not expect the same treatment? And as a music lover, think about all the great new artists you may never hear simply because they are deemed too financially risky to support by record labels. And the industry relies on information to make sure audiences get what they want. But it is slowly going blind with regards to information about what music is popular where, and among which demographic, which risks performers and their audiences become disconnected. Artists and labels are losing market overview about where music is popular, promoted, played and broadcast. In short, everyone loses out, whether they recognize it or not. But to solve this we only need the answer to one simple question — who’s listening and where?

Leveling the musical playing field

At Utopia Music, we know the digital music genie is well and truly out of the bottle. The good news is that the problem technology created can also be solved with technology; tracking music consumption at the destination, not only the source. Hand-in-hand with consumption data, who’s listening and where, the current fragmented, ad hoc management of music copyrights needs to be standardized and centralized.

That’s why we are developing a system to collect music consumption data on a global scale, and combining it with an open music copyright database. Together, they will form the foundation for the reinvention of the music industry with the goal of recouping and correctly distributing the estimated 45 billion dollars in currently uncollected music revenues. Basically, we want a fair deal for artists, labels and music lovers everywhere. Don’t you?

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