Changing value creation models in the music economy

Transcription

1 Changing value creation models in the music economy

2 Patrik Wikström Associate Professor Principal Research Fellow QUT Digital creative economy (Music) Computational social science Time

3 QUT QUT DMRC conducts world-leading research that helps society understand and adapt to the social, cultural and economic transformations associated with digital media technologies. Journalism, Public Communication & Democracy Industries, Policies & Economies DIGITAL MEDIA Digital Method Innovation Technologies & Practices in Everyday Life

4 TODAY Three shifts Changing value creation models in the music economy

5 but first

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9 excludable non-excludable rivalrous Private good (food) Common good (fish stocks) non-rivalrous Club good (theatre performance) Public good (free-to-air television)

10 live licensing recorded

11 digital disruption

12 Integrated circuit Fairchild Camera and Instrument Company 1961

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14 loss of control The New York Clipper, November 3, 1906

15 loss of control

16 excludable non-excludable rivalrous Private good (food) Common good (fish stocks) non-rivalrous Club good (theatre performance) Public good (free-to-air television)

17 TODAY Three shifts Changing value creation models in the music economy

18 industry sectors

19 live licensing recorded

20 live recorded

21 live licensing recorded

22 live licensing recorded Music licensing revenues have more than doubled during the past two decades

23 The revival of the music publisher

24 Shift #1: From recorded music to music licensing and live performance.

25 social and creative fans

26 Shift #2: From finished products to platforms for co-creative fan-artist relationships.

27 tools, building blocks & rewards

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33 Shift #2: From finished products to platforms for co-creative fan-artist relationships.

34 ownership v access

35 Shift #3: From a productbased to an accessbased logic.

36 Loyalty, passion, ownership, products & brands.

37 Loyalty, passion, ownership, products & brands.

38 Loyalty, passion, ownership, products & brands.

39 Products. Ownership. Brands.

40 Products. Ownership. Brands.

41 excludable non-excludable rivalrous Private good (food) Common good (fish stocks) non-rivalrous Club good (theatre performance) Public good (free-t o-air television) service product

42 excludable non-excludable rivalrous Private good (food) Common good (fish stocks) a product-based non-rivalrous Club good (theatre performance) Public good (free-t o-air television) music economy cannot compete with free

43 excludable non-excludable rivalrous Private good (food) Common good (fish stocks) non-rivalrous Club good (theatre performance) Public good (free-t o-air television) service product

44 Access-based music services

45 Access-based music services have returned many music markets to growth

46 Access-based music services the dominating revenue model in a growing number of music markets

47 Access-based music services remain very controversial

48 Are access-based music services fair to creators? Bad for music Ridiculous payouts Unfair to small artists It s a scam!

49 Incumbents response to technology-based disruption Denial Combat Resignation Acceptance cf. Kübler Ross 1969

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54 Access-based music services What is the controversy about?

55 (1) Do streaming music services generate enough revenues? 0.8 Revenue streams access ownership per track

56 (1) Do streaming music services generate enough revenues? 0.8 Accumulated revenues access accum ownership accum per track

57 (1) Do streaming music services generate enough revenues? Ownership Access 2 x 12 new tracks per year $0.7 x 24 = $17 per year 30 min per day (excl. radio) 10+ tracks per day 3500 tracks per year $0.005 x 3500 = $17.5 per year per user

58 (2) Are labels fair? Depends on the deal Breakage? Shareholder dividends? Performance or sales?

59 Governmental intervention

60 Shift #3: From a productbased to an accessbased logic.

61 Let s take this reasoning just a little bit further

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63 Access-based music services what is the impact on audience behaviour?

64 Impact on audience behaviour? E.g. Local music repertoire %

65 Can access-based music services really reduce piracy? How often do you use filesharing services, such as PirateBay? After you started using Spotify Before you used Spotify 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Never Seldom Sometimes Often

66 Impact on audience Listen to illegally downloaded music Amount of money I spend on music I share music I listen to with my friends I discover new music I play my digital downloads Time spent searching for music Time spent listening to music behaviour? Practices 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% More Don't know/won't say Less

67 E.g. Impact on audience behaviour? Practices I listen less to illegally downloaded music: 70% I discover more new music: 80% I spend less time searching for music: 70%

68 Access-based music services shift the focus from the collection

69 to the real-time listening experience

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71 how do accessbased music services compete?

72 May 2007

73 today: more or less identical catalogues

74 access is about to become commoditized (commoditization / commodification)

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76 access-based music services look for new ways to compete

77 A. Audiences focused on a real-time listening experience B. Service providers look for new points of differentiation

78 Playlists galore

79 Successful music data analytics startups have been acquired

80 in the search for the ultimate algorithmically curated playlist

81 What happens when algorithms make our music listening decisions?

82 music is an experience product

83 peers awards experts brands media exposure

84 If algorithms take over the listening decisions, audiences no longer need a relationship with artists

85 they only need a relationship with Spotify!

86 How is this different from other cultural sectors?

87 What about live music?

88 Shift #3*: From music celebrities to algorithmically curated music experiences.

89 Changing value creation models in the music economy #1: From recorded music to music licensing and live performance. #2: From finished products to platforms for cocreative fan-artist relationships. #3: From a product-based to an access-based logic. #3*: From music celebrities to algorithmically curated music experiences.

90 thank