Predicting the future of the music business in the rapidly evolving digital age is tricky. In the past decade, innovations like the iTunes Store and streaming Internet radio have radically changed the playing field. As 2014 continues to unfold, there are several trends that indicate opportunities for songwriters and musicians.
Crowdsource funding, brand/band partnerships and digital streaming have the greatest potential as consumers’ perceptions and patterns continue to change — and as all three areas reach new heights this year. Still-resurging vinyl sales will remain a boon for indie acts and for labels releasing special editions and reissues. These developments promise widening avenues of exposure and more revenue streams for touring, recording and other requirements of career growth and development. There’s even a small silver lining for cash-strapped musicians: the price of quality instruments will continue to drop as established, new and foreign manufacturers struggle for their share of the relatively small market, especially in guitars. Let’s take a look at each of these trends:
• Crowdsource funding: As label-supported artist development continues to fade into history, more and more acts will tap their fan bases to raise funds for recording, marketing, distribution, touring, instruments, vehicles and other necessities.
“We have seen an over 110 percent increase in the number of music campaigns launched in 2013 over 2012, and an over 200 percent increase in the amount of dollars raised by musicians,” says Karen Bair, head of creative verticals at Indiegogo, a leader among the more than 450 crowdsource funding platforms in operation. The former PolyGram executive says that crowdsource funding has now spread across all genres, but was especially fertile last year in the metal, hard-core and screamo realms. “Artists in those genres are very social-media savvy and are very accessible to their fans,” she relates.
Bair sees not only more independent artists using Indigogo and other platforms this year, but predicts “major label artists will start using crowdfunding more to supplement label budgets. For example, a signed band may have a $10,000 video budget, but wants to make a $20,000 video, or an artist in a band may want money for a solo project.” So far hip-hop and EDM have lagged behind other genres in crowdsource funding, but “those genres have such avid fan bases that I think they’ll do more this year,” Bair notes.
Her advice: “The most successful artists offer experiences and products their fans can’t get anywhere else — Skype chats, meet-and-greets; one band offered to take over a fan’s Instagram account for a day. It’s a matter of coming up with great perks and really engaging your fans.”
• Brand/band relationships: These marriages of artists and corporations will increasingly provide big money and exposure for entertainers, but they’re typically most accessible to performers who have muscular teams — labels, lawyers, attorneys, management, booking — in place. For artists in a position to garner such deals — like Citi’s pairing with the Rolling Stones’ 2013 50 and Counting Tour, and 2012’s Nokia/ATT/Green Day union — the good news is that the days when musicians with brand sponsorships were labeled “sell-outs” by fans are apparently over.
According to a November 6, 2013, story in Billboard, the 2013 Nielsen Music 360 Report, which examines all music interaction, used 2,600 online surveys to collect data to find that 74 percent of music streamers feel more favorable about brands that engage them through sweepstakes, music giveaways and sponsorships. The survey also found that streamers feel more favorable toward brands that use music in their marketing. And the streaming audience is growing quickly. Last year 68 percent of U.S. consumers used an audio streaming service, up 40 percent since 2012. Additionally, Nielsen found that 76 percent of festival attendees are more favorable to brands that sponsor music tours.
Marcie Allen, president of MAC Presents, which specializes in brand/band and brand/event marriages, says the business has grown from $530 million to $1.3 billion annually since she started her deal-making company a decade ago. And with nearly every major country artist and tour already under a banner, Allen predicts that rock n’ roll will be the genre to experience the greatest proliferation of these partnerships in 2014.
“Fans need to perceive that these deals are done in a authentic way that brings something of value for them to the table,” she notes. As a result, Allen sees these partnerships spawning more original branded artist-created content this year— from streaming live performances to new recordings to online mini-musicals and more.
“The dynamic is much different from the old days of having a brand’s banner up behind a concert,” she says. “Artists involved with brands contact them if they are launching a tour or recording an album, or starting a philanthropic effort. The avenues are going to keep growing and the primary driver is going to be social media.”
• Live performances: “Live shows have always been the bread and butter of great artists,” says music industry veteran Harvey Leeds, owner of management firm Headquarters and a former VP of artist development for Sony and VP of promotion for Epic. “Phish didn’t get rich selling albums, and you can’t download the concert experience.” However, it can be streamed and televised, and Leeds says that with the sound and visual capabilities of modern technology, “I can see that growing big time in pay-per-view and other outlets.”
But right now the traction being gained by Stageit and other new web based platforms has made it easy for even die-hard indie artists to stream concerts to fans via a laptop and a webcam, and to ask those viewers for donations. And these performances are often staged in performers’ apartments, living rooms and porches, reducing the need for financially and physically challenging low-budget touring.
• Streaming: Download sales decreased for the first time in 2013, while music streaming accelerated significantly, as the Nielsen 360 survey quantified. Streaming will continue to grow this year.
The challenge for songwriters and other artists is finding ways to reach their fans as streaming becomes increasingly important, says Glenn Dicker, co-owner of Redeye Distribution, one of the country’s largest distributors of independent label recordings. “At some point, streaming companies are going to give artists access to communicate with their fans, and that will ramp up artists’ revenues by putting a spotlight on tour dates and new releases, but we’re not there yet,” he observes.
Dicker suggests artists continue to view streaming outlets like Spotify and YouTube as ways for their music to be discovered and appreciated by listeners, which in turn should drive fans to shows and to make purchases. Right now Dicker notes that social media is the best tool for driving fans to streaming channels to ramp up their plays and make their presence known. More branded-sponsored and-dedicated channels, which are likely to draw a finer demographic bead, may also be on the horizon, says MAC Presents’ Allen.
• Vinyl sales: Redeye’s Dicker also predicts that vinyl sales will continue to grow and be an important revenue source for indie artists and labels, who collectively manufacture more titles than the majors. In 2013, Redeye experienced a 37 percent increase in vinyl sales, which accounted for 60 percent of the distributor’s overall physical sales to the independent retailers, who sell the lion’s share of vinyl. “The core fan base, kids, are buying vinyl in a big way, and that will continue to grow as long as the bands put an emphasis on the quality of the package,” Dicker says.
But there’s bad news with the good. These shops are small, boutique operations that know their customers well and place orders for one-to-five copies of each title with a curatorial sensibility. They have limited space, so competition to get into their bins is stiff. Dicker relates that “the most successful indie bands are the ones that set themselves apart by combining great music with a complete presentation — excellent artwork, liners notes, something that feels and looks substantial. Having a free digital download attached is essential.”
• Musical instruments: Pressures in the gear market will continue to create advantages for musicians looking for quality at low prices this year. That will be especially true for the most popular songwriters’ tool, the guitar. Small manufacturers of everything from electric guitars to effects pedals have sprung up despite the recession. These boutique companies are nipping at the heels of the major guitar makers, who will retain their lead, but are also challenged by lower-priced imports from China and Korea. Years ago these imports were typically low quality, but “the quality of these instruments all across the board has risen,” says Kevin Mitchell, editorial director of Musical Merchandise Review, which covers the retail musical instrument and accessory business. One leader, Gibson Brands, has just answered this challenge with its first U.S.-built solid-body electric guitar list-priced under $500.
Potential changes in brand loyalty may also help drive prices down. “It used to be that guitar players wanted the same instruments as their heroes: ‘Slash plays a Les Paul, so I’m getting a Les Paul,’ ” Mitchell adds. “But today’s emerging players want to distinguish themselves, and part of that is having a guitar that’s different.”