The music industry has been hurting badly for years, but a turnaround may be coming with a little help from big-data.
We’ve all heard about the losses faced by the music industry in recent years with reports of total revenue falling from nearly $15 billion in 1999 to slightly more than $6 billion in 2009. And although Apple last month announced that we’ve now collectively downloaded more than 25 billion songs on iTunes alone, sales of digital downloads haven’t offset the industry losses. I believe big-data will play an enormous role in turning things around -- sooner rather than later.
I'm not along in my thinking, either, as evidenced by the number of companies now specializing in music analytics. Some of the most popular are Band Metrics, RockDex, Next Big Sound, GigsWiz, and Musicmetric, according to HypeBot.com, a music business site. Musicmetric, for example, says on its website that it serves thousands of people in the industry, tracking and indexing data for 600,000 artists and more than 10,000 million individual releases using data from a variety of websites including social networks.
The big-data potential in music is enormous, in large part because of all the data generated by the people who are buying, downloading, and communicating about music online. Information aggregators can sort through the disparate pieces of data and clarify what people like and want; analytics tools and platforms can track how artists perform on fan pages and social media sites; and web crawling, data mining, and digital processing reveal what fans are saying across blogs, social networks, and other sites to assess their digital pulse and connect that to sales.
A new study, "What Social Media Has to Do With Record Sales," shows an exciting correlation between online activity and sales. This has enormous potential for producing more bang for the buck in such areas as merchandising and concert-ticket sales, which are taking on increased significance in the wake of so much change. Interestingly, between 1999 and 2009, ticket sales for live-music events tripled from $1.5 billion to $4.6 billion, according to industry reports.
As we move forward, I expect to see fewer labels, digital sales continuing to dominate, and piracy to remain an irritant. And with inexpensive music-streaming services like Spotify, which claims to have 20 million users and five million paying subscribers, the line between owning and listening to music will continue to blur. I also expect to see a growing number of tools to help analyze data faster and better, in such areas as predictive analytics and data conversion.
How do you see the music industry shaping up, and what role do you see data analytics playing in the music business in the years to come?
As a data analyst who works in the music industry, I just had to chime in on this post. Venkat is correct that the application of analytics will have a significant impact on the music industry, as it's having on hundreds of other industries. However, because the music industry is a "creative" one, it is not necessarily seen as the traditional arena for the use of analytics. But rest assured: many people in the industry are already realizing its potential, even though some analytics experts seem to believe that it's not yet happening (for example, see Tom Davenport's recent op-ed in the Wall Street Journal: http://blogs.wsj.com/cio/2013/03/06/the-future-of-entertainment-is-analytical/ ).
One significant shift that those who are not in the industry may not realize has occurred is that the music itself is no longer the primary object of trade—it is now the artist. The music has become a part of the overall experience of being a fan of an artist, alongside other things as live performances, merchandise, television appearances, etc. (a trend that has been driven in no small part by the loss in sales revenue, as record companies look to reduce their losses through obtaining revenue shares of these channels; these are known in the industry as "360 deals"). The focus is now on building relationships with fans, and that is one of the primary areas in which analytics is currently being employed.
In terms of analyzing the reams of social media data, Venkat mentioned the two big players: Next Big Sound and Musicmetric. Both companies have also incorporated data from many other sources (including Soundscan sales data, radio airplay data, torrent data, etc.) as well, and have created online utilities that allow artists (and their labels or representatives) to monitor their activity from many different perspectives. With these tools, artists are now able to more strategically build their fan base, which is extremely important for independent artists who typically have extremely limited budgets.
For the listener, analytics is being utilized in order to improve the listener experience of certain internet streams, in essence creating a very personalized radio station (as some of you who commented on the supposed decline of radio may appreciate). For example, Spotify has incorporated complex algorithms created by The Echo Nest (www.echonest.com) into its Radio utility, and as a listener myself I have been very impressed by its ability to play almost exactly what I'm trying to train it to play.
Beth writes I know a couple of young guys who had been prowling around for record players and old records because they wanted to be able to enjoy that listening experience -- they're "hipsters" I guess you'd call them, into music, and think vinyl is cool. CDs were a think of their youth, I suppose, so that medium doesn't have enough coolness cache for them.
There was a TV news story recently about the revival of interest in vinyl — connoiseurs seeking the sublime purity of sound or something. Personally, I would prefer the truly pure sound of digital on CD to the scratches and distortion of vinyl LPs, so there.
iPods and other MP3 players obviously have opened new possibilities, but does anyone really listen to, say, Beethoven's 9th on an iPod? With earbuds?
Beethoven etc. aside, I'd not be averse to listening to more "popular" stuff on an MP3 player; may get one one of these days.
Last point: Seems to be some kind of disconnect betwqeen the mutation of technology — now apparently planning on a medium life of about 2 decades — and increasing human lifespan. So you invest in your favorite music in one medium, only to find it's obsolete before you've finished living about 1/4 your lifespan (or even a smaller fraction). Does anyone think the music industry cares?
Hi Lyndon, that you went out and bought another CD player to have on hand is a good idea. I know a couple of young guys who had been prowling around for record players and old records because they wanted to be able to enjoy that listening experience -- they're "hipsters" I guess you'd call them, into music, and think vinyl is cool. CDs were a think of their youth, I suppose, so that medium doesn't have enough coolness cache for them.
this whole cd thing also reminds me of my girls, who is 19 now. She was laughing at me a couple of weeks ago. "Mom, do you remember when we asked for iPods for Christmas and you got as all portable CD players?"
As I recall, iPods has just come out and were quite costly -- especially compared to the price of a Sony Discman, and I was buying three of them and my kids all had plenty of CDs to play on them. Of course, it didn't take long for us to get with the modern age and move into the Apple music world. And the rest is history...
Beth writes I hadn't been thinking so much about this from a quality perspective -- as in quality of sound -- but in convenience and coolness terms.
I think there's been a net advance in the transition from analog recordings (e.g., vinyl LP records) to digital — starting with music CDs, which (somebody correct me if necessary) I think are recorded in a WMA format. There is some tradeoff, mainly in the slight loss of sound data, but for me it's a net gain because the digital format is superior in durability and the elimination of sound distortion (e.g., scartches, end-of-record distortion, etc.). Digital (format and hardware) is obviously far more portable. For personal recording, the format seemed to be WAV until the widespread ascendancy of MP3.
However, I've been told that there is some further loss of sound data in MP3 compared with WMA/WAV. Now, I've generally had pretty good hearing (I used to be able to hear ultrasonic motion detectors), but I don't really find an audible difference in actual sound quality between an MP3 and a WMA or WAV recording.
In any case, I'd be wary of any further audio format that would further degradate the quantity of audio data — say, for the sake of compaction and reducing the storage space.
My other beef is the inexorably mutating music storage format environment — from vinyl to CDs and now to ... nothing. And, oh yeah, various cassette tape formats along the way (e.g., 6-track, cassette, mini-cassette, digital cassette, etc.). The abandonment of a format almost invariably means the abandonment of the hardware to support (read, i.e., play) that format.
In personal terms, this means a struggle to try to find ways to digitize my LP collection, but also seems to spell doom for my CD collection. Here at home we fully expect CD players to wither into extinction, and recently bought another player as a potential future replacement for our adequately working one in anticipation of the day it bites the dust and there's no replacement anywhere (except maybe on Ebay).
My point is that the music industry seems to have no real interest in dealing with these very real and painful issues that confront many "consumers" (especially passionate music lovers).
I think a good study wouldn't just be the music sales themselves, but the listen behavior of consumers. For example, in the past, I may have been exposed to new music at a dance club or bar on the weekend. However, I rarely do those things anymore. An ageing population may be more adults staying at home or doing other events, reducing exposure. Another place, I might be exposed to new music is on the treadmill at the gym.
Besides illegal downloads, music sales may have a product placement problem.
Though, I won't feel to bad for the industry. It looks like total sales are up from last year.
@SethBreedlove - I think you should try the radio once in a while, When you play your own music sometimes you tend to listen to only the songs you like, whereas on a radio you will hear a mix of all songs.
@BethSchultz - Well as you said radio is a good option, you don't find repeat songs, you get the chance to listen to the most popular ones. The best part is you don't have the burden to look for a particular song.
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