Music Industry 2.0
Moshito Music Conference & Exhibition
Presentation On Technology
TOPIC
Technology: How It Impacts the Music Biz, Especially the Traditional Value Chain
On the one hand, technology has had a hand in the continuous downward spiral of
CD sales, the rise of digital piracy and the demise of the traditional retailer.
On the other hand, technology has empowered music creators and emerging
labels with a platform to better connect with fans, promote product and open up
new revenue opportunities.
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•
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We will first look at the traditional value chain vs. the digital value chain.
Understanding different players and their motives.
The new model.
ADAPTING!!!
TRADITIONAL VALUE CHAIN
Artist:
Creation
Recording
Label:
A&R
Sales
Manufacturing
&
Marketing
Distributio
n
Wholesale:
Retail:
To
Retailers
To
Customers
TRADITIONAL PLAYERS & MOTIVES
PLAYER
MOTIVES
Majors and
independent record
labels
Generate revenue through album, single and DVD sales.
Artists
Generate revenue through album, single and DVD sales.
Retailers
Generate revenue through album, single and DVD sales.
DIGITAL VALUE CHAIN
Digital Assets
Management
Rights
clearance and
Royalty
payments
Hosting of
digitized
formats
Artist/Music Industry:
Content Creation
Artist: Creation
Label: A&R
Recording
Recording
Sales
Sales
&
&
Marketing
Marketing
DRM Encoding
Online media
player
software
Billing
Network &
Device Provider
Content
Delivery
Delivery
Over
Over
Networks
Network
Consumer
Consumer
Device
Devices
DIGITAL PLAYERS & MOTIVES
PLAYER
MOTIVES
Majors and
independent record
labels
Trying to generate additional revenue through the digital sales format
while avoiding revenue losses due to online piracy, cannibalisation of
traditional revenue streams and the “commodisation” of music.
Artists
Trying to receive additional revenue through the digital sales format
while avoiding revenue losses due to online piracy. Establish own
distribution platforms to gain popularity and/or to sell music.
Hardware producers
Use the interest in content to sell hardware allowing functionality and
interoperability.
White label services
Maximize revenue by catering services to digital music stores solutions.
Software producers
Aiming to establish player and DRM software as standard for content
delivery.
ISPs
Use the interest in content to attract customers into premium Internet
services.
Content portals
Retain and leverage Internet audience to attract traffic and advertising
NEW MUSIC BUSINESS MODEL
Think different and make money with music!!!
• Less than 10% of the music released into the market represents 70% of
the radio airplay.
• There are many opportunities for monetization plus new and emerging
business models, allowing artists and labels to make money.
• The biggest issue in the music industry is not the price but rather the
millions of ‘free’ content (the market does not look at this as music piracy
but rather free content).
Adapt to new models...
• It is becoming increasingly hard to develop and expose new talent. We
often hear the phrase "Adapt or die”. It may seem exaggerated,
threatening ... but for the music industry, these are the only two
alternatives. And they have never seemed so real.
• Direct marketing to fans (set of marketing initiatives focused primarily on
the monetization of the relationship artist and fan) is booming. This
business model no longer depends solely on radio air-play or TV
broadcast. It depends mainly on the relationship maintained between the
artists and their fans.
Connecting with Fans + Provide Reason to
Buy = Revenue
• Find your fans, create loyalty, give them reason to buy and you will
earn money.
• Attract their attention and connect with them.
Technology makes it easy to connect and
attract fans
• If you are an artist and you do not have a website, the YOU have FAILED you
CAREER.
• MySpace might be ‘old ‘ but it is still a good idea to create you own MySpace page.
• Facebook is key. Why? Because knowing your fans is vital.
• Bandcamp is the new MySpace but even better.
• Youtube allows you to broadcast yourself to the world.
• Email and newsletter are still a weapon of mass seduction.
• Twitter reaches everybody.
• Flickr, Wikipedia, Deezer, LastFM. All these strange words should be in your daily
vocabulary.
• SEO (Search Engine Optimization). Get familiar!
Thabiso Khati
Founder & CEO
Street Music
Mobile: +2782 886 2259
E-mail: thabisokhati@streetmusic.co.za
Skype: ThabisoKhati // BBM Pin: 22512038 //Twitter: @HipHopScholar