Analysis

Future Music Forum 2013: Big music data, true fans and the ‘big f***ing pie’ of streaming revenues


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Ben Cardew reports from the Future Music Forum conference:

The shadow of big data hung heavily over the fourth Future Music Forum in Barcelona last week, as speakers grappled with the question of what information really counts for the music industry, among millions of digital datapoints available.

The event kicked off with The Orchard founder Scott Cohen (pictured) suggesting that the music industry “is obsessed with measurement” but may be “measuring the wrong things”, an assertion that set the tone for the two days.

These wrong things, he claimed, include the unit sales that still dominate industry discussion even in the age of streaming. But the question of what the music industry should instead be measuring proved trickier to answer, dominating several panels.

Cohen himself suggested the music industry should pay more attention to Average Revenue Per User, which ties into the time-worn theory of 1,000 true fans. Concentrating on the $10 CD, he argued, undersells these core fans who would be prepared to pay far more to connect with musicians (a theme that resurfaced in a crowdfunding panel the following day).

Cohen added that the “attention economy” we are living in also requires a shift away from the concentration on traditional formats towards the creation of a steady stream of “micro content” that will keep fans engaged.

Musicmetric’s Marie-Alicia Chang also weighed into the debate over data, with a presentation that focussed on what type of user behaviour correlates most closely to sales patterns (and can therefore be seen as a predictor of future sales). There was little surprise that on a global scale, local Google searches correlate most closely to records sales, followed by BitTorrent downloads.

But Chang surprised many people in the audience with her company’s findings that Last.fm behaviour correlated very closely to sales – far more so than Spotify streams in most countries and way ahead of YouTube plays or Twitter activity – as well as the intriguing discovery that YouTube plays correlate more closely to sales behaviour than plays on the music-focused Vevo.

“In the US, gaining a new fan on Last.fm is 50% to 65% more accurate in predicting a purchasing consumers than gaining a new fan on Facebook or Twitter,” Chang´s colleague Jurgen van Leeuwen explained.

Alex White, CEO of music industry analytics specialist Next Big Sound, also gave an insight into his company´s data, claiming that in the US people typically listen to music on Spotify during the week and buy from iTunes at the weekend.

This information, he claimed (via industriamusical.es), as well as the wealth of other data his company captures can be used to identify artists who are likely to score hits in the future, therefore reducing the risk of investment in A&R.

With the event taking place just two months after Atoms For Peace’s Nigel Godrich and Thom Yorke attacked Spotify for the rates it pays artists, it was no great surprise that the issue of streaming rates was taken up by several speakers.

Adam Perry, CEO of Bandapp and a musician himself as the drummer for the Bloodhound Gang, challenged the view that it is up to labels to ensure that musicians are adequately compensated from streaming, rather than the streaming services themselves.

“I think that the dominant player in the (streaming) market should know (how much artists are paid),” he said. “They should do some detective work and find out, otherwise the whole thing falls down.”

Scott Cohen, however, suggested that it is wrong to look at streaming services according to how much they play per stream, as these services operate on the subscription model.

“With the streaming/subscriptions services it is not about the per-stream amount,” Cohen said. “The focus is on how many listens/views an artist gets in relation to all other artists. Then they get a larger share of the pie. And it is a big fucking pie. Spotify said their share to rights holders this year will be over $500m.”

In terms of building this pie, Rdio’s deal with radio group Cumulus Media in the US, which was announced this week, could prove highly significant. As previously reported, this will see Cumulus will take a “significant” equity stake in Rdio’s parent company, as well as promoting Rdio across its 525 stations, while also selling advertising for the streaming service’s free tier.

“It is a huge deal for us,” Rdio´s Stefan Baumschlager explained at the conference. “It gives us so many more ears in the US with one hit than all the other on demand streaming services there combined. It also gives us an advertising budget of $100m a year to play with. We are going to use that money to break new bands and promote existing records.”

Music Ally

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2 responses
  • Jack Paxton says:

    The whole streaming controversy over royalties drives me nuts because the argument against the services is so insane, and lacks any amount of rationality. Any artist should be royally sucking up to all of the streaming services and not fighting against them. They should be happy for the little bit they do get and remember that our other option is to pirate the material. Form well know services like Pandora and Spotify, to less known ones like Pulselocker and Torch music, this IS the new means for profiting off recorded music, and artists who are unhappy with this need a major reality check.

  • Albert Torres says:

    Last FM correlates closer to sales because in essence is a streaming radio service. Last FM is a replica in internet of the terrestrial radio, and iTunes is the internet replica of the traditional physical stores. Instead Spotify and YouTube are purely internet products, on-demand. The first ones come from a scarcity environment, and the last two are born in abundance. Therefore behaviors are different.

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