This guest column comes from Pieter van Rijn, CEO of FUGA:
“In a business as dynamic as music, it goes without saying that one of the few constants is change. It’s also no huge revelation to say that we weren’t always in a place where change was understood or appreciated.
Parts of the record industry used to try to control change by attempting – and usually failing – to curtail technology and/or consumer behaviour in order to fight piracy. Take early invasive copy protection measures and the major-owned subscription services Pressplay and MusicNet for example.
However, we have moved past that now. Consumers are finally flocking to music streaming, and we can look forward to an exciting period of growth.
This is a change worth embracing, if the figures are anything to go by. Goldman Sachs’ latest Music In The Air report predicts that the streaming music market alone will hit $28 billion per year by 2030.
In 2016, streaming services generated more than half of all U.S. music revenue, and in the UK, 2016 saw a 500% increase in audio streams in just three years.
Rather than just try to best manage change, it’s time for music businesses to go one step further and start gearing themselves up for it. One of the areas where this is less obvious but extremely important is in the digital supply chain.
For example, new technologies, along with the abundance of streaming data, are making the role of the digital distributor more strategic.
Rather than just being the conduit that delivers content to music services, smart distributors are now in a position to offer rights management alongside financial and data insights to a label’s digital, marketing and management teams.
Indeed, talk has now turned to another technology, the blockchain, which has the potential to shake up our rights infrastructure. Time needs to be invested to explore and trial possible implementations, bottom up and top down, all the while continuing to manage present rights systems.
Blockchain may not be a working model for some years to come, but we need to understand it if we’re going to stand a chance of improving transparency.
So what can the music business – especially independents, who don’t always have the resources to model scenarios and build their own sandboxes – do in the face of this constant change?
Digital has provided a golden opportunity to level the playing field for independents, and it’s more important than ever for them to build upon this and ensure they can still compete in a democratised and fair landscape, whatever that may look like in years to come.
Meanwhile, in order to compete with the traditional media monopolies, any content owner needs the right tools ready.
1. Learn from other industries
First, take a leaf from other content industries and use technology to unburden you, helping you focus on your core strengths. TV producers now focus on creation and production of content, outsourcing logistics and technical facilities.
Meanwhile, book publishers are increasingly outsourcing printing, distribution and advertising, enabling them to concentrate on storytelling. Investment bankers externalise clearing and digital trading infrastructure, allowing them to focus on maintaining client relationships and developing investment strategy.
If you are a label or distributor, it’s important to take a look at all the rights and datasets that you have and their related revenue streams and ask yourself what kind of organisation you want to be.
Do you want to just focus on A&R or do you want to manage the entire supply chain? Do you need to handle all DSP relationships in house or just the key ones? Do you want to track NR data yourself or hand this over to specialists?
Use the answers to dispassionately inform the activities which you deem core to business success, both those you do yourself and the ones you outsource, as it’s unlikely you will have the resources, knowledge and time to do everything efficiently in-house.
2. Keep your focus
Second, don’t get lost in the weeds. Technology and logistics can deviate attention and costs, and you should see technology as a means but not an end in itself. Do not jump on every new technology or development without asking yourself how useful this technology actually is for you.
Make sure to investigate how product support and service is managed, which can often be an issue with start-ups. Trends and analytics, for example, can be of great value, but it’s easy to quickly drown in data that isn’t then put to good use.
So be selective and maximise your investments by ensuring that any technology solution adopted – be it a latest trends product, royalty accounting feature or distribution technology – adds value by supporting your ultimate goals.
A good tech partner will not only help equip you for managing change and deal with the operational burdens, but let you retain full control and transparency over your rights and income.
3. Take care of your metadata
Last but not least, clean up your metadata and keep it centrally stored, across all rights segments. The changing requirements by DSPs are leaning towards ever cleaner and more transparent rightsholder information.
In order for the adoption of legally-licensed music services to succeed, catalogues must come to them with the information they need to ingest, curate and pay back on content efficiently and accurately. This is especially true as we move towards a globalised music streaming industry with multiple currencies and complicated territory rights.
Technology may be the disruptor, but we need to be better and faster at harnessing it to weather change to stay relevant. This means gearing your business to stay closer to the curve, turning threats into opportunities faster than your rivals.
The oft-quoted analysis on Charles Darwin’s work has never rung so true for our industry: “it is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change”.
Of course hindsight has proven there is still no silver bullet for success. Numerous businesses have struggled and closed in the navigation of change. But many others survive.
It’s a great challenge, but we’ve done it before and we can do it again. After all, no one knows exactly what the future may throw at us, so let’s make sure we’re as prepared for it as we can be.