Music Industry in the COVID World
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
Concerts have to come back in some form. As artists like Tory Lanez find new and innovative ways to bring concert experiences to the masses, there is still a hunger for the true, outdoor live concert experience. People are waiting for the days of sitting in an amphitheater as the sun is going down listening to their favorite artists’ songs. So how could it work? Is there a way that the live concert can continue while respecting social distancing rules and protecting the health of concert-goers? It seems as if this unique scenario brings about opportunities rather than problems for the music industry. There are several unique ways to bring back concerts and drive revenue:
Charge a premium for tickets and limit attendance to 2000 people in 20k or less venues. No, not everyone is going to pay $500 or more for a concert ticket but somebody will. And $1 million in ticket revenue is better than shutting the door completely, no?
Logistically, large arenas and amphitheaters are going to have their work cut out for them when concerts return. In the meantime, there is an opportunity for mid to lower-level artists to swallow their pride and consider getting even closer to their fans. There is an opportunity for street or literal backyard tours across the nation for artists to continue to generate some income, build social content, and make touring work in the meantime.
Pulling off a 40 date concert tour in a pandemic world is a monumental task. But what isn’t as much of a monumental task is pulling off one show. Artists and their teams need to think of new ways to drive some revenue and one way may be to plan a one-off show complete with enforced health measures and social distancing for “super fans.”
7. The Sound of Music Will Change
One complaint that has been gaining momentum on social networks is that the sound of hip-hop isn’t currently reflecting the realities of quarantine and social distancing. Week by week as the world sat in self-isolation, rappers continued to churn out music about money and street life, largely ignoring the fact that unemployment in the US is at record highs and people are actively seeking hope, an escape and something to cling on to. hip-hop has gone through significant shifts in sound before. Whether it was the onset of “gangsta rap” or the “jiggy” era, the sound of rap music typically mirrors the goings-on of society. So what will the impact on the sound of hip-hop be coming out of the pandemic? It’s unlikely that as the lockdown eases, people will be clambering for tales of street life and hard times given “hard times,” whether figuratively or in reality, is what everyone has been experiencing over the past months. No one truly knows how this pandemic will shape the sounds of hip-hop but if history has taught us anything, it will change it once again.
8. Attention Will Be Challenging Once Things “Open Up”
As quarantine has shuttered sports, concerts and the filming of movies and TV has paused, plans for re-opening worldwide economies are in the early stages (unless you’re Texas). And while phase one is unlikely to get the sports and entertainment world back in full swing, those days are coming and the music business must be prepared. With the real possibility of all major pro sports playing seasons at the same time and a backlog of movie releases and first-run programming waiting in the wings — not to mention amusement parks, and travel restarting at some point in the near future — the music business needs to figure out now how they will compete and win customer attention post-pandemic. One thing remains true and that is great music always breaks through, especially from established artists. More than ever the music industry will need to hang its hats on its stars to ensure at least a portion of the entertainment spotlight. New albums from Drake and Kendrick Lamar will be anchor releases for the industry to ensure that attention remains on music. ‘
The industry got a boost last week when controversial rapper 6ix9ine released his first song and video “Gooba” following a prison term drastically cut short after cooperating with federal agents. Unbelievably the video for the song set the all-time record for most views by a hip-hop artist in 24 hours at an astonishing 43 million views in 24 hours. (The song would go on to debut at no. 3 on the Billboard chart.) Merits of 6ix9ine as an artist or person aside, this is the type of attention the music industry will need going forward. It’s also very likely that the major labels and industry as a whole will need to strengthen strategic partnerships with sports leagues and entertainment to ensure that an overwhelmed public will keep music top of mind in forthcoming times of overwhelming choice.
9. Fans Will Have Less Disposable Income
The true worldwide economic impact of the coronavirus has yet to be seen but early reporting suggests we could be heading towards something comparable to that of the great depression, with the slowdown costing the worldwide economy $1 trillion in 2020 alone. So, what does all this mean for the music business? One needs to look back to the great depression and see patterns that are very likely to repeat themselves. Thinktank Synchtank analyzed the music industry during the late ’20s and early ’30s and saw concerning trends. During the economic downturn, live concerts were hit hard as music fans who normally traveled for concerts stayed home to save on travel costs, driving down live music revenue and resulting in a less vibrant live music market. But the report also looked at how, even during the great depression era, music fell to 3rd place behind radio and cinema for entertainment options. The same thing is happening today where music is fighting a battle with Netflix, social media, and other forms of entertainment for the public’s attention. The reality is today and going forward people will need to make choices with their dollars and the music business hasn’t even yet felt the impact of sports returning which will no doubt be digging into people’s wallets, especially once fans are allowed back into arenas. By all accounts the next two years will be lean times for many and where the sell of streaming putting all the music ever made at your fingertips for $10 a month or all-you-can watch concert passes from Live Nation may have been easier sells pre COVID-19, the music industry will be in a fight for disposable income for the foreseeable future.
10. There Will Be New Live Concert Experiences
Even when a coronavirus vaccine is available, it’s very likely that live concert experiences will have changed forever. Denmark recently brought concerts back although with a different twist as music fans drove-in to assigned parking spaces for a drive-in concert from an artist by the name of Mads Langer. And while the idea seems out there, even gimmicky today, the merits of a drive-in concert for both the artist and concert-goers are real. Many people don’t enjoy the experience of being shoulder to shoulder with others watching a concert, and we’ve seen countless examples in the past where cramming thousands of people into a confined space can have dire consequences. And then there are the food and drinks. Famously overpriced and in some cases, in limited supply, such was the case at the infamous Fyre Festival.
The drive-in idea potentially solves those issues but also introduces interesting partnership opportunities with companies like Uber. Want to indulge in adult beverages during the show and not worry about driving home? There is a premium service opportunity with Uber where drivers wait in a designated area, allow the music fans to watch the show from their car, and then drive them home. The movie business has already found a way to bring more comfort and privacy to the movie-going experience through VIP theatres where movie-goers drink, eat, and enjoy the film in comfortable, spacious seating. As the world continues to change, there is also the realization that while people hunger for live concerts again, they may be open to new ways of satisfying that hunger.