Attendees at the Slush Music conference in Helsinki this morning may have turned up expecting to hear The Orchard co-founder Scott Cohen telling them why the music industry is broken, and how he’s going to fix it. That was, after all, the title of his session. It was a red herring.
“Once a week somebody comes into my office to tell me ‘the music business is broken and I know how to fix it’. And I started thinking about that a bit, and I couldn’t find the reason it was broken,” he said, by way of introduction.
“I looked at the labels. Is it broken for the major labels? I looked at the charts: they seem to have all the hits, they have the back catalogue. Doesn’t seem to be broken for them. The independent community is thriving and their market share is growing every year. It doesn’t seem to be broken for the record labels.”
Cohen suggested that the music industry actually handled its 15-year decline in revenues “very well” in terms of cutting costs, preparing for the return of growth, and now scaling up again when it arrived. “They didn’t go out of business. It’s not broken for record companies,” he said.
“And then I looked at artists? Is the music industry broken for them? You think Justin Bieber doesn’t make any fucking money, poor guy?! I think artists make more money now than ever before. We’re talking about not just the recordings, but their touring, their merchandise.
“If you’re a big artist today and you have a following, people will literally pay you for it. If you have Instagram, Twitter, Facebook followers, brands will pay you a fortune to reach your audience. This is the best time ever to be an artist. You certainly wouldn’t want to go back to the days when artists got these single-digit royalty rates and were screwed out of all their money. Remember those stories? It doesn’t exist any more. Artists are at the top of the food chain making more money than ever before.”
Cohen moved on to the streaming services. “100 million subscribers and going up. It doesn’t sound broken. People will throw around ‘Oh Spotify doesn’t make a profit’. Who cares? That’s not the business they’re in right now. Last I checked, their valuation is $16bn. What was the value of the company five years ago? I would say if I’m an investor in Spotify, it’s amazing. It’s not broken.”
“There’s lots of headroom. If I was an investor in them and they said ‘I’m going to start taking profits, I’d say then you’re not using your money right. This is a growth phase of the business. it’s not a time to settle in and take profits. It’s not a little mom-and pop-industry. This is a big, scalable industry. And if you’re a record label or the music industry in general working with these services, you’re getting 70% of the revenue. So it’s certainly not broken with the new services.”
Cohen moved on to the situation for music fans? “This is the greatest time ever to be a music fan. You have the entire history of the recorded music industry at your fingertips. You can pay a monthly subscription fee, you can pay per item, you can get it for free. You can get physical… It doesn’t matter how you want it, you can get music any way possible for any price point that suits you. And you have no problem discovering music,” he said.
Cohen took a jab at heritage artists complaining that the industry is broken for them. “Maybe, but maybe we just don’t want their new album any more. They were popular in the 80s, the 90s or the early part of this century. and we’ve moved on,” he said.
“It doesn’t mean they’re bad people, but the public wants different music. It’s not that there’s something fundamentally wrong with the business model because they’re not making as much money as they once did… Artists that were big in the 50s weren’t big in the 60s. Artists that were popular in the 60s were not big in the 70s. But they didn’t complain it was because of the business model. It was just because that was the end of their career.”
Cohen also talked about the landscape for unsigned artists. “You can record virtually for free. You can do it on a laptop if you want, and you have access to markets. When I started the industry, if you were an independent artist you had no way to sell your music. You couldn’t get in to stores… You were not allowed to put your music in a store. But now any independent artist can make their music available to the world,” he said, noting that social networks and apps also help them communicate with their audience.
The thrust of Cohen’s speech was that while the music industry isn’t broken, that doesn’t mean there aren’t challenges in the market, and opportunities to solve those challenges.
One of those: how will we market and promote music in a world of voice-enabled services: Alexa, Google Assistant and Siri and their associated smart speakers as the gatekeepers for music discovery and consumption.
“This is where we need some thought… What happens in a voice-activation environment where you can’t see anything? You just have to speak. How are you going to market and promote? What will this change in the music industry? Will artists start changing the song titles to make them more searchable? Is it better to have a song title that says ‘running’ in it because that’s a highly-searched term? Does it become SEO instead of an artistic expression?” said Cohen.
On AR: “Imagine that the world now is having an information layer wrapped around it, kinda like the electrical grid. Everything will either contain information or you’ll be able to get the information out of it? What’s that going to mean for music?” he said. “We don’t need to fix the past: we need to go forward and say ‘wait a minute, what will that mean for music creators?’.”
As for VR:. “Music is also about experiences… You get people that say ‘Oh yeah, you can put on a VR headset and then you can watch a concert. You can look around and see the people next to you and the band on the stage’. Well I can just go to a concert! I don’t even have to put a headset on for that,” he said.
“If I put on a VR headset I want something that I can’t do in real life. I want something to blow my fucking mind! Not see a band on the stage. That I can do in real life. So what are the experiences that you’re going to create in a virtual reality environment?
“Think back to the early filmmaking when they put a camera on a tripod and they filmed a play, and then you were supposed to watch it. Well, that was fine, but then the craft of filmmaking came along and you made films differently than you made plays. I don’t want to put a VR headset on and listen to an album or watch a concert. I want a unique experience. And this is going to open up a whole new side of the industry.”
Finally, Cohen talked about big data and analytics, where he sees huge opportunities for an industry that has always thrived on metrics – chart positions, unit shipments, sales. But now with the torrent of streaming data, the industry must get smarter at understanding what’s happening, and the triggers driving it.
Cohen warned that current analytics tell us a lot about the past: what happened on Spotify – the streams, the skips, the saves to people’s libraries. “But we need to go into a new world where we’re looking forward. If I have this information, what does it mean? What am I supposed to do? If you get added on Spotify’s New Music Friday, that’s amazing for Friday, but what happens next week? What are you supposed to do next week? What does the data tell you? If you don’t know how to answer that, you’re going to be struggling in the industry,” he said.
“In the old world, if you had a song played on the radio and it got into heavy rotation, you knew what to do… you booked some TV appearances, you get some more articles, you ship extra units to the stores because you know you’re going to sell them. You book a headline tour, you increase the size of the venue you’re going to play. You know what to do next. But I’m not sure everyone knows what to do next now. When things happen for you online, what do you do next?”
Cohen concluded. “The music industry is not broken, it never was broken, and it doesn’t need to be fixed. It is an amazing industry, it’s the best time ever to enter it, there’s huge opportunities and problems that need to be solved, but having problems that need to be solved is very different from saying the music industry is broken,” he said.
Cohen was then joined by Peter Vesterbacka, formerly of Angry Birds developer Rovio, for a discussion of those next steps, including his views on those new AR and VR experiences. Cohen said he’s hoping for “a world of dynamic recording” where music can change and morph over time, and according to who’s listening to it – but still with the artist as the creative force.
“There’s so many amazing, talented artists, songwriters, performers, but for me personally it’s been a long time since I saw something new when I went ‘holy shit, that’s new’,” he said.
“I’m waiting for young artists, tech companies, music companies… rather than just to put a song out there, to say ‘We’re going to create a new experience that nobody’s done yet’. I’m waiting for that, and I want it to be a young artist. There’s nothing wrong with the older artists, but it should be someone who’s 18 years old who grew up in the 21st century and says ‘I’m not going to do it like my parents did it. I’m going to create something new’.”
He later returned to the theme. “In 2017, I don’t even need a physical manifestation of an instrument to produce music. I just need to have great thoughts, amazing ideas and an iPhone, and I can be a creator. It is moving, so where will we be in five years? If today we can make music without an instrument, what will the next five, ten years look like?” he said.
“Who’s going to take it one step further than that, and create experiences – dynamic recordings that change over time, that change based on the user?”
Cohen also talked about his other current focus on ‘implantables’ via his Cyborg Nest startup, which has started out with a device designed to be embedded in your chest, which vibrates when facing north. What does this have to do with music though?
“I don’t want to use technology: I want to become technology. And as we become one with it, the experiences that we receive are going to change. What kind of experiences will come directly to me? Not through my eyes, not through my ears… Instead of having to look at a screen. I don’t want to put glasses or a headset on, or interfere with my hearing by putting on earbuds. I want experiences to come directly to me. And I don’t mean with a neural implant, I mean directly to my body,” he said.
“Like when you go to a nightclub and you feel the music, pushing on your chest with that bass. There’s other ways that you can experience creative ideas that can come to you, and it’s not just visuals and it’s not just sound… I think experiences are going to continue to be fundamental to the creative industries.”