✖ What strategies fit the current cycle of bundling and unbundling in music?
And: Monstercat 💖 Rocket League; the rise of virtual idols; Dua Lipa's actual ticket sales; new venues to open in the UK
A business or industry is defined by whether it’s in an era of bundling or unbundling. Currently, I see the music industry in a state of both at the same time which brings with it interesting tensions when questioning our strategies and where we should focus. Go all out on the streaming business? Or move hard into direct-to-fan business? The latter, of course, in a sense creating a bundle from the unique content and access to the creative process an artist can provide.
First, a step back to remember how we got here
At the start of this millennium music existed mostly in a bundled form. It was bundled, for example, on albums or via radio shows. Similarly, the business was bundled too with record labels being bundled services for artists. We all know what happened next, as first Napster and then iTunes totally unbundled music back to its pre-longplayer state of having to pay for a 45 to get one song.
The first reaction to unbundling is always one of relief: we are finally able to only pay for those parts of the old bundle we actually want. We think we’re probably paying less for the parts than we were for the bundle. In relation to iTunes: we can pay for our favourite track only instead of having to pay for the whole album.
Moving towards the present
At some point during the unbundled era there comes a sense that on the consumer side people become interested in access to larger pools of content at once. This is what Spotify and all the streaming services leaned into with their monthly subscription fee that provides access to all music all the time. At the same time, on the business side there surfaces a sense that the pool of interested consumers for unbundled services or content is being maxed out. In order to find more people interested in unbundled content businesses then start to rebundle their content. We see this with Spotify, Deezer, et al joining forces with, for example, OTT or cable TV operators. In similar moves, Apple presented its Apple One bundle and Amazon just announced the integration of music videos with their Unlimited subscription. Similar moves are being made on the video side, where Netflix, Amazon, Disney+ and the rest are fast thinking they’re started to run out of affordable new direct-to-consumer subscribers. Instead they’re working together with partners to create broader entertainment bundles. 2021 is set to be the year of the overlapping video ecosystems.
As I mentioned, the unbundling and bundling of content often goes hand in hand with a similar movement in the broader industry involved. At the same time, we see an acceleration of the bundling, unbundling, then rebundling cycle in the digital age. Take Disney, which is a massive bundle of major IP generators. Yet, it’s also now Disney+. That is a standalone offer that should be competing as an unbundled product but is both bundled with the TV business it’s supposedly meant to bring down while being priced in such a way that it can live easily next to its fellow disruptors in the video space.
While all this bundling, or rebundling, is going on there’s also a significant amount of potential in a different kind of unbundling. Similar to video, music in 2021 could well be a story of overlapping ecosystems. On the one hand the major streaming services keep trying to find bundles to attract previously untapped subscribers. On the other hand music is being unbundled further from regular distribution strategies through direct-to-fan business models. Furthermore, music creation is being unbundled from its old production facilities thus allowing many more people to produce music.
Of course, the acceleration of the bundling/unbundling cycle means that some of these creator tools are already being bundled into the strategies of and services offered through the major record labels and streaming and tech companies.
Legacy services and formats will continue to decline while finding a niche within the unbundled direct-to-fan model. Music and entertainment bundles will find their way into the lives and homes of many people, whether through a bundled subscription or a technology bundle involving, for example, a smart speaker or other type of hardware. The next steps, then, are either to aggregate further services, tools, distribution and music, or to seperate further from existing models and try to find a niche audience or user-base to monetize.
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🗄️ An excellent interview with Barry Massarsky on the Synchtank Blog on the role of data in determining the value of music catalogues.
“On a scale of one to ten, I would put the significance of data integrity at a ten. Data has to be cleansed. Data has to be right. And it’s not just getting it clean, it’s looking at the patterns.”
🎮 How to lean into gaming you ask? Take a leaf from the Monstercat playbook, who have partnered, amongst others, with Rocket League. In three years, 90 songs placed inside the game have garnered 400million streams on streaming platforms.
🇨🇳 Rumours abound that Alibaba-owned Xiami Music will be shutting down next month. Even though they seem to have grown their subscriber base from 3million in 2018 to over 14million in 2020 they still can’t compete with Tencent-owned Kugou, QQ, and Kuwo and NetEase Cloud Music. Of course, Alibaba also took a stake in NetEase Cloud Music last year.
🦄 Virtual idols keep growing in popularity. Mostly in China, Japan, and Southeast Asia, but much like K-Pop I expect this to cross to the west soon.
“They have different specialities. Some of them are talented in singing. Some used to be professional gamers, while others specialise in chitchatting with viewers. There are real people behind the virtual idols who provide their voice, and movements and facial expressions using motion capture technology.”
Fan Yibai, virtual idol chief manager at Bilibili.
🌐 Dua Lipa’s Studio 2054 livestream is being touted as one of the major livestream events of the year. Just last Tuesday Bas linked to an article quoting the 5million viewers number. Since then, IQ Mag has a bit more info on the breakdown of the figures. The so-called ‘hard ticket sales’ are actually at 284,000. Still an amazing amount, but not - to my knowledge - breaking any records set by BTS earlier in the year. Sometimes, throwing the marketing figures out and then following them up with, still impressive, actual numbers can be a little deflating.
🥁 NIVA, the US-based indie venue association, has teamed up with Spotify to promote the value of those venues. Spotify allocated $500,000 of their usual end-of-year media budget to donate to NIVA. Indie venues across the US now show #2020wrapped messages on or above their doors.
🎶 Some news from the UK that points towards the future return of live music. Part of the redevelopment of the Olympia conference centre in London involves a new venue to be operated by AEG. Over in Cardiff, a new arena looks to be run by rivals Live Nation and Oak View Group.
🏝️ Like everywhere else in the world, Ibiza nightlife shut down this year. DJ Mag has a great article diving into how the island can reinvent itself post-pandemic. This basically comes down to whether island and club promotors will actively work to get the superrich back.
💿 Record Store Day, after being spread across 3 days in pandemic 2020, will be held on 12 June 2021 instead of their usual third Saturday of April date.
For those of you into rare funk 45s, you may have recognised the above record of The Fabulous Shalimars. My go-to label for rare funk is London-based Jazzman Records with Sister Funk 2 being a favourite compilation.