The way forward for music streaming: Change or be modified

The music enterprise, leisure as a complete – even the world – are at turning factors. The long run could also be unknown, however there’s at all times one certainty: issues are going to be completely different. The change that acquired us right here was paradoxically each quick and gradual. Gradual sufficient that we didn’t discover it occurring, but quick sufficient that our lives are dramatically completely different from simply ten years in the past. Dramatic change requires dramatic options – what acquired us right here gained’t get us there. 

To this finish, MIDiA is producing a  ‘Way forward for…’ report sequence that makes use of right this moment’s change catalysts to map daring visions of what the longer term may, and extra importantly, ought to appear to be. We’re excited to announce the primary of those stories: The way forward for music streaming: Change or be modified. Whereas the concepts and proposals are MIDiA’s personal, we stress-tested them by means of background interviews with the CEOs and heads of all of the main international music streaming firms. Here’s a preview of our findings.

The case for change

The music {industry} is in a great place – presumably too good a spot. With streaming economics now mature and stabilised, rightsholders and DSPs alike have shifted to cruise management. In the meantime, exterior funding has flooded into rights, attracted by steady economics and development potential. Financialisation and optimisation have turn out to be the defining market forces. Most significantly, shoppers are having fun with essentially the most highly effective and handy music proposition that has ever existed. But it’s the nature of this enterprise that simply if you assume you lastly have issues found out, the bottom begins to shift as soon as once more. Beneath streaming’s calm floor, sturdy currents of change are churning. Amongst them:

• Social video is competing with music streaming time – and amongst 16-19-year-olds, it’s successful
• 10% of shoppers would cancel their streaming subscription if costs proceed to rise
• New generations are usually not connecting music artists to their identities in the identical approach millennials and older generations did
• 67% of impartial labels imagine it’s more durable now to construct artist careers as a result of rising quantity of songs
• The rise of generative AI is bringing issues over quantity to a fever pitch, with 60 million lively customers of gen AI music apps in 2024

So, why repair an issue that in some ways, doesn’t but exist? The reply is straightforward: ready till it’s a downside will likely be too late. It was optimisation as a substitute of innovation that set the recorded music enterprise up for a fall within the late ‘90s. Again then, the CD was the dominant format, and post-boom development was pursued by way of worth will increase quite than innovation. Sound acquainted?

The catalysts for change

The evolution of music codecs has progressively flattened the music listening expertise, collapsing context and seeing comfort persistently trump leisure. There are various extra passive music shoppers than aficionados, so it’s little marvel that as streaming mainstreamed, it optimised for the passive large greater than superfans. It’s time for friction to be launched.

Chinese language streaming apps present us the best way, not solely placing friction forward of comfort, however productising it. Chinese language streaming customers lean in and do issues to get essentially the most out of their expertise. Crucially, there’s a clear effort / reward equation underpinning this. File labels’ rising deal with fandom is let down by streaming as a result of fandom didn’t catch the streaming bus within the West. China is the Sliding Doorways view, displaying us issues might be completely different. Streaming UX must lean into friction, making music enjoyable, not merely handy. 

The BEATS innovation framework

Within the report, we map the alternatives and introduce our BEATS innovation framework that displays 5 points of the normal music enterprise which have a case for reintroduction (for extra on this framework, take a look at our new Way forward for music streaming web page).

Of all of them, setting price limits is each a very powerful and essentially the most controversial. The democratisation of music distribution was essential however introduced a tidal wave of unintended penalties – not least, the existential problem of reducing by means of the muddle. Right now’s system will not be working, and  it can solely worsen as generative AI music fills the passive playlists listeners rely upon to navigate the bewildering over-supply of music. Labels, distributors, and DSPs alike must work collectively to create completely different lanes for music and to handle the availability of music with human-led curation. 

Within the report we clarify how every DSP ought to lean into its distinctive traits to construct real market differentiation, in addition to a sequence of industry-wide suggestions corresponding to membership golf equipment and user-led curation. There may be merely a lot within the report; a weblog publish like this will solely scratch the floor. We’re extremely pleased with this piece of labor and are assured that it’s a should learn for anybody within the music {industry}. MIDiA purchasers can learn the report proper now. In case you are not but a MIDiA shopper and want to study extra about this report, take a look at our Way forward for music streaming web page.