2013 was a year of digital music milestones: 15 years since the arrival of Napster, 10 years since the launch of the iTunes Store and 5 years since the birth of Spotify. Which begs the question, what will we looking back at in 5 years as the success stories of the ‘class of 2013’? There have been some interesting arrivals with promise, such as WholeWorldBand, Soundwave, O2 Tracks, Bloom.fm, Google Play Music All Access (ahem)…. As is the nature of start ups many of the dozens that started in 2013 simply won’t go the distance. Indeed many of Spotify’s ‘class of ‘08’ have fallen by the wayside: MXP4, MusiqueMax, Beyond Oblivion, Songbird etc. If the ‘class of ‘13’ want to emulate collective success then it is the ‘class of ‘07’ they should look at: a bumper crop of success stories that included Songkick, Topspin, Deezer, Songza and Soundcloud (though Spiral Frog and Comes With Music were notable flops).
So what can the ‘class of ‘13’ and the rest of the music industry expect in 2014? Well here are a few of my predictions and aspirations:
- Label services will grow and grow (prediction): following the lead of the likes of Cooking Vinyl and Kobalt every label and his dog appears to be getting in on the act. Which is no bad thing. The choice used to be binary: DIY or label. Now labels are borrowing some of the clothes of DIY and in turn transforming the artist relationship from one of employee to client. Expect many established frontline artists coming to the end of their label deals in 2014 being persuaded to opt for a label services deal with their label rather than jumping ship.
- Downloads will be flat globally (prediction): the download is still the dominant digital product globally but in the markets where streaming has got a strong foothold it is eating into downloads. A key reason is that the majority of paid subscribers are also download buyers and their behavior is transitioning. But in most of the big markets, and in most of the non-Northern European markets, downloads are the mainstay of digital and will grow further in 2014, cancelling out declines in the US and elsewhere.
- Latin America and Africa will both grow in importance (prediction): these are two regions with hugely diverse national economies but both also contain a number of markets that are ripe for digital lift off, particularly in Latin America. However the standard solutions for the western markets will only have limited success. Expect innovative newcomers to do well here.
- The streaming debate will NOT resolve (prediction): expect strong continued growth in streaming. Spotify should hit 10 million paying subscribers soon – the free mobile offering may even push it to 100 million users. Deezer should clock up another milestone soon too. And Beats Music could get really serious scale if it does indeed bundle with headphone sales. But the nature of the debate means the bigger streaming gets the more artists will perceive they are being short changed, because individual artists will feel the impact of scale more slowly than the market. Expect things to really hot up if Spotify goes public, does well and the majors do not distribute meaningful portions of their earnings to artists.
- Spotify, Deezer and Beats Music have a good year (aspiration): to be clear, this isn’t me breaking with years of tradition and suddenly jettisoning impartiality and objectivity. Instead the reason for the inclusion is that the future of investment in digital music will be shaped by how well this streaming trio fare. Between them they accounted for 70% of the music invested in music services between 2011 and 2013. These big bets may not be leaving a lot of oxygen for other start ups, but if they do not succeed expect digital music service funding to get a whole lot more difficult than it is now.
- Subscription pricing innovation accelerates (aspiration): regular readers will know that I have long advocated experimentation with pricing so that portable subscriptions can break out of the 9.99 niche. In addition to more being done with cheaply priced subscriptions we need to see the introduction of Pay As You Go subscription pricing in 2014. Pre-paid is what the mobile industry needed to kick start mobile subscriptions, now is the time for the music industry to follow suit.
- More innovation around multimedia music products (aspiration): one of the most exciting things about Beyonce’s album last week was the fact it put video at its heart. Since I wrote the Music Product Manifesto in 2009 depressingly little has happened with music product strategy. Of course not every artist can afford to make an album’s worth of flashy videos, but hey, they don’t need to all be flashy. Here’s hoping that a few more labels follow Sony’s lead and start really pushing the envelope for what music products should look like in the digital era. Here’s a clue: it is not a static audio file.
P.S. If you’re wondering why I am so harsh on Google Play Music All Access it is because they can and should do so much better. The market needs innovation from Google, not a ‘me too’ strategy. Come on Google, up your game in 2014.