Is the Music Industry Dead?
Private jets, Cristal, €18 CDs and million-dollar recording budgets. Let’s face it, the music industry is well and truly dead. In an age where one artist can single-handedly dominate a Top 20 chart with 16 of his songs, we are in the midst of the greatest music industry disruption of the past 100 years. A fundamental shift has occurred — a shift that Millennials are driving.
For the first time, record sales aren’t enough to make an artist’s career, and they certainly aren’t enough to ensure success. The old music industry clung desperately to sales to survive, but that model is long gone. Even superstars have it tough. Pitbull — despite having 50 million Facebook fans and nearly 170 million YouTube plays — has sold less than 10 million albums in his entire career. This is the reality of the new music industry, which is built off of liquid attention, not record sales. Why? Well, the answer lies with us , the Millennials. We’ve taken over the music industry by controlling the two things that matter most – Supply and Demand.
All that’s required to make a modern record is a computer and a piece of affordable recording software. One of the most powerful professional DAWs (a digital audio workstation, used to produce music) is Logic Pro from Apple, which costs only €200. Inside the DAW are virtual instruments like pianos, synthesizers and drums, as well as all the necessary tools to edit and produce audio. Most of the equipment required to create music has been absorbed into the DAW, while the software continues to get easier and easier to use. The end result is that artists can create music more quickly, more efficiently and less expensively than at any other time in history.
Here’s a great example: Gotye created his song “Somebody That I Used to Know” in his parents’ house near Melbourne, Australia. The self-produced track reached number one on more than 23 national charts and charted inside the top 10 in more than 30 countries around the world. By the end of 2012, the song became the best-selling song of that year with 11.8 million copies sold, ranking it among the best-selling digital singles of all time. (But now Gotye is “somebody that we used to know 😉 )
Martin Garrix reached the top of the charts in more than 10 countries with his smash hit, “Animals,” which he produced and released at 17 years old. The song hit number one on Beatport, making Garrix the youngest person ever to receive the honor. Millennials, who can simply record after class or work, are mostly familiar with this technology, but our open-source attitude toward learning is much more important.
Search “How to use Logic Pro” in YouTube and you’ll find thousands of free tutorials. Sites like Reddit have entire communities with tens of thousands of members who are dedicated to learning about music production. Technology is cheap and high-quality learning resources are free. As the result, artists have massively successful records without having set foot in a recording studio.
The music industry is just like any other big business: It follows cash. Over the past two decades, music has suffered through the CD bubble, torrents, Napster, iTunes (with Apple taking a 30 percent cut of everything) and now, the ubiquity of streaming services, which reduces sales below the already rock-bottom level.
The music industry has been rocked by new trends and over the past few years, has succumbed to a state of near free-fall. It’s clutching whatever few straws are left in an attempt to salvage profit from the remains of its broken business models.
As music becomes more and more entrenched in the digital realm, Millennials have emerged as the dominant consumers. More importantly, we dominate the most promising emerging market for music: mobile devices. We use music, media and entertainment apps more than 75 percent more and social sharing apps about 20 percent more frequently than any other age group.
In a nutshell, Millennials consume the most music and tell the greatest number of people about it. While it’s obvious that consumption is important, why is it so important that we share what we listen to? The old music industry had a banner metric of artist success: album sales. For years, album sales have been declining and the growth of singles and streaming services have accelerated the trend.
As we’ve transitioned into a digital music economy, new measures of success have emerged. A new generation of artists has hit the scene and they thrive on attention rather than units of music they sell. The attention has become just as valuable as our likelihood to purchase, as it leads to festival and performance attendance, merchandising sales and other sources of revenue.
However, we still won’t buy your music. Brands know this, too. Companies like Heineken, Youtube and Red Bull will pour more than $1.34 billion into sponsoring music venues, festivals and tours this year. Over a billion dollars will be spent for the opportunity to build customer relationships and brand equity with digital natives. In contrast, the top 10 highest-earning electronic artists last year cumulatively made just over €240 million — less than 20 percent of what brands will spend in 2017 to capture Millennials’ attention.
What brands understand is that music is an important part of Millennials’ identity. It’s more than entertainment for us. The music we listen to can be as important as how we dress and influences who our friends are. Going to festivals and shows is an expression of identity. Brands know that if they can identify with a DJ like Calvin Harris and his dedicated fan base, they’ll have more than just the consumer’s brief attention. The brand will become part of the fans’ lifestyle. That’s why Emporio Armani are teaming up with Calvin Harris to attract Millennials.
The end result is that the music industry and the big brands are both chasing the new generation of artists; artists who can capture, retain and monetize attention — instead of album sales — and who can keep Millennials interested.
Music Discovery is easier than ever
It goes without saying that music discovery and music production go hand in hand. However, just as technology has enabled easy music production for young, emerging artists, it has also provided them with a way to reach fans all over the world.
There are the classic success stories like Justin Bieber and Lana Del Rey, of course, but below the YouTube empire rests an entire culture of Millennials who are discovering music online. Platforms like SoundCloud have more than 250 million active users each month and Millennials discover their music predominately through these digital platforms.
Incidentally, when digital natives produce new music, they release it first on the digital platforms. This is how Millennials are playing both sides of the field: They’re creating more music than ever and releasing it onto platforms where their peers go to discover music.
The music industry middleman has been cut out and a back-and-forth conversation replaced it. Of course, huge stars like Katy Perry still dominate sales, but Millennials are eroding that model with a new, grassroots discovery model.
Where do we go from here? With advancements in the technological age of music creation, the sky is the limit. Artists who you think would never collaborate with other artists will try and find a “new sound”, thus creating a new wave / sub genre so other mainstream artists can latch on to it and drain that for all it’s worth.