2018 kicks in: 13 things we can expect in the next 12 months
STREAMING #1: PUSH FOR $4.99 SUBS AS NORM
The fiercest debate through 2018 will be how to keep streaming at its current rate of growth, where it could hit the $20 billion mark in 2025 with 336 million paid subscribers according to MiDia Research.
That’s triple the take-up and revenue in less than a decade. Streaming listens were up 50% last year from 2016, according to BuzzAngle.
By late last year, major label execs were warning that the industry should continue to focus on getting rid of free tiers.
Warner Music’s Stu Bergen stated at the Slush Music conference: “I would caution us not to get drunk on two years of growth. We have to stay vigilant, continue to drive the adoption of paid streaming subscription.”
Speaking to Billboard,Apple Music’s Jimmy Iovine was apprehensive that a multi-product company like Amazon could well be tempted to drop its music subscriptions to $7.99 a month to expand its usage.
“Woah, guess what happens?” he mused.
However, some execs believe streaming services must continue to have free and with accessible entry-point tiers to attract new streaming users and to avoid a drop in demand.
Their argument is that streaming is quite expensive.
Forbes pointed out that the average U.S. music consumer spends around $156 per year on music, and the $10-per-month U.S. Spotify subscription would add up to $120, or nearly 80% of their yearly music budget.
Additional data show that many Americans don’t just use one streaming service: 57% of the 18—34 demographic and 39% of the over-35 group subscribe to two or more services.
As more new companies eagerly enter the streaming market, their strategies will be to introduce different price points and new services to find their audience.
There are some who suggest that $4.99 a month is the ideal subscription figure which will generate growth.
Spotify and Apple Music already have student subscriptions at $4.99, while Amazon has done that with discounts for Prime members ($7.99 a month) and owners of its Echo assistant ($3.99).
Direct deals with labels by iHeart and Pandora offer enhanced radio at $4.99 that includes offline listening and replay functions.
STREAMING #2: IMITATION GAMING
2018 will be the year where the music biz will actively learn from the gaming industry and how it gets its streaming customers to shell out more money with initiatives such as exclusives and endurance testing.
Last year the FastForward conference in Europe held an excellent panel on this subject, and hopefully will revive the theme when it stages in Sydney for the first time in April.
STREAMING #3: SPOTIFY IPO/DIRECT LISTING TO BE MOST WATCHED EVENT
The long-awaited Spotify $20 billion IPO or direct listing within the first quarter of 2018 will be one of the most significant events for the global music industry – and the rumours have already begun.
The Swedish company, now with 70 million subscribers (as tweeted last week) is already in a good place, where steady but unremarkable revenue growth over recent quarters has seen Wall Street tentatively give a nod of approval.
Yet analysts estimate it will be the end of 2018 before Spotify reaches the heights where investors will return en masse – so it will need to provide realistic targets with each quarter in the meantime not to scare investors away.
But a successful Spotify IPO or direct listing will see a huge influx of new capital into all sectors of the music industry, bringing in more new disrupters than ever before.
STREAMING #4: AMAZON BECOMES THIRD MAJOR PLAYER
In 2016, Spotify and Apple Music together added 20 new million subscribers by being all-things-to-all-people.
Throughout this year they’ll be expanding. Spotify is in 59 countries and raised $500 million last year for this purpose. Apple Music is in 113 countries – its parent company has deep pockets, generating revenue of $52.6 billion in its fourth quarter alone ending September 30.
2018 will see both will work to maintain their lead with new services and original content, and their battle will centre around which is perceived by consumers as the leader in music discovery and curated playlists.
Spotify leads in that regard because it had a head start. That could change this year depending on what Apple Music does with its newly acquired audio recognition app Shazam.
Amazon Music Unlimited is working at being the third major player. Last month it launched in 28 new countries (with Australia getting its 40 million-strong catalogue in the first half of 2018) and has plans for a massive marketing boost and target superstar acts with lucrative sponsorship deals.
In other moves, Deezer’s audio recognition feature SongCatcher, until now available on beta, will be aggressively launched globally through this year.
The general feeling is that Tidal, SoundCloud, and maybe Pandora and iHeartmedia will consolidate – either by acquiring other minnows or being swallowed up themselves.
MORE ARTISTS WILL RUN THEIR OWN LABELS
The desire for complete artistic independence will see even more artists run their own labels… and possible create more magnificent music in the next five years?
They have direct access to data and distribution, marketing tools, as well as options as crowd-funding, investor-agency partnerships and accelerators.
This in turn will see major and indie labels change their models.
For instance, will major labels drop their middle level acts eventually, as shrewd artists only sign with them when they reach superstar status?
Will indie label deals increasingly stop being exclusive in order to adapt to the new landscape?
Will labels continue to adjust their future to the reality that the internet has allowed too much product to get out there, but marketing of these remains lacklustre?
Will the idea of giving music away for free with the option of buying or donating eventually become commonplace?
BIGGEST POP CROSSOVER FOR EDM
In a 2018 prediction for the electronic dance music sector by EDM Sauce, a number of its major identities came up with some forecasts.
These included more EDM/pop crossover collaborations than ever before (which would reflect in EDM festival bills), a growing trend for breakbeats and bass in DJ sets, more involvement in charities, greater adoption by the major players of Blockchain-powered music format(s) and artist-to-fan platforms, as well as a sharper spike in mainstream awareness of dance music via synch deals.
VOICE ACTIVATION BOOM COULD BE TIPPING POINT FOR BIZ
The explosion of voice assistant take-up will be lead by Amazon, as more people by become aware of Alexa and Echo ahead of the Australian release.
In America, 2017 saw ownership of Alexa devices jump from 2% to 15% of households while brand awareness was up from 77% of consumers to 89%.
Amazon is estimated to have a 65% share of the 24 million smart speakers that shipped globally in 2017, with the company having “hundreds of scientists” working on making Alexa smarter and more human.
Last February, Alexa had 10,000 skills. By November it had 25,000.
This year, Alexa will respond to more vague instructions (“Alexa, play something from the first Foo Fighters album, I can’t remember its name”), will identify your voice to deliver your playlist rather than someone else’s in the household, be less regionally-challenged, and expand Alexa to become a daily essential feature in homes, cars, workplaces (“Alexa, start the conference call meeting”, “Alexa purchase printing paper”) and shopping.
Following it’s Microsoft partnership making it easier to talk to Alexa, similar team-ups will be announced in coming months. Amazon predicts it will be making $11 billion in annual sales from Alexa by 2020 – not only in devices but in the e-commerce it will generate.
The company claims that 40% of those who own these devices shop more with Amazon.
Plans by other companies will, through 2018, see more brands using voice assistants to notify customers by voice and in paid placements in search engines.
Will Amazon and Google way out in front, will Apple regret its decision to delay the release of HomePod to this year rather than before Christmas?
GEN Z WILL EFFECTIVELY CHANGE COMSUMPTION, CONTENT, BUSINESS MODELS
Extensive data analytics and sensor technologies research done last year on Gen Z (born between 1995 and 2012, or aged 23 to 26-years-old this year) will give brands and music companies the information on how to reach them, which they didn’t have with the millennials.
Marketing to this age group, and developing services and business models around them, will begin in earnest this year as Fear of Missing Out kicks in.
In 2015 Australians aged under 15 were 18.8% of the population and expected to be 19% in the year 2020. In America, Gen Z make up about a quarter of the population.
The first generation born into a post-Google and social media world, Australia’s Gen Z has a greater global perspective than any other generation, and are more likely to feel an affinity with the 2 billion Gen Zers around the world than with older Australians.
Their current purchasing power is $44 billion, according to a study from IBM and the National Retail Federation. Says one analyst, “Their continued inclination towards social content on their mobile phones, first seen in millennials, is changing the way that content is consumed, shared, and even the way it’s created.”
While millennials are tech-savy, Gen Z is tech-native. They have a shorter attention span, prefer short-length videos, and aren’t loyal to any one platform.
They spend 10 hours a day online, two hours on YouTube (by 2020, a global 90% of them will be YouTube users) and use smartphones almost three hours a day to consume TV shows, videos, music, games and social media.
Indeed, the New York Times wondered if smartphones were replacing drugs for this demo because they give a bigger high.
For the post-millennials, it’s more Instagram and Snapchat than Facebook. They prefer Messenger and apps to email. They opt for Netflix to television, and satellite and cable services are of little importance.
They are prone to messages from cultural influencers (the Kardashians, the Hadids, Zendaya, Shawn Mendes, Ariana Grande, FKA Twigs and Fifth Harmony are on top of the list), which means entertainment content which takes its cue from these influencers and what they stand for – whether it’s beauty or social activism or self-empowerment – will most strike a chord.
Gen Z’s digital obsession means they see entertainment as a friend, and one in which they want to foster stronger and more interactive relationships.’
In other words, they want a major role in developing script ideas, choose the cast and how it’s distributed.
Gen Z is more cautious with how it spends its money – which means that music companies, and other brands, need to do their research. It’s made even easier by the factthatGen Z has no qualms about releasing personal data to researchers.
LIVE MUSIC #1: TACKLING LATE TICKET SALES
The live music sector will address the problem of concert and festival goers increasingly buying tickets later and later.
This is mostly due to online ticketing from both primary and secondary sources, with fans knowing they can still buy tickets just before showtime through the latter – and sometimes for cheaper than face value.
But this later commitment trend is also due to the entertainment dollar and time stretching tighter.
It is also seen as a generational shift, genre-based purchasing habits (punk and metal fans traditionally buy later) and also due to greater mobile use in ticket buying (up 37% in the US, according to Ticketmaster).
Pollstar spoke to live music execs on how they would tackle the problem. Ticketmaster has partnered with ticket-buying app Gametime which moves most of its tickets within the seven days before a show.
It is also in discussions regarding integration with Facebook, YouTube, Spotify and Google Assistant to make last minute buying easier.
Tickets won’t be put too far ahead of the event. A trend will be to have first-round of tickets cheaper to draw and lock-in customers.
It will also reduce less mass-buys of tix by online brokers, which means less mark-up of prices.
After Taylor Swift and Harry Styles successfully used services like Ticketmaster’s Verified Fan to ensure their real fans got tickets first, more major stars will also opt for these in 2018.
This yearwill alsoreveal to the industryif the trend for the average age of festival attendees to be increasing. If it does, alarm bells should start ringing.
Vans Warped Tour founder Kevin Lyman, told Pollstar that in 2017, the average age of his punter moved from 16 to 19.
Lyman lamented, “That super young side of our demo just seemed to want to stay inside and watch Netflix.
“I’ve been telling people ‘Look, if those 14-17-year-olds don’t turn into 18 to 21-year-olds that start going to concerts you lose them because concerts get imprinted in your DNA by the time you are 21.
“If you’re not going to shows by the time you’re 21, chances are they’re not gonna be that important to you.’”
LIVE MUSIC #2: INCREASING ENGAGEMENT WITH PUNTERS
One important trend at live events over the past 18 months will become more marked in the next 12 months.
Audiences are wanting performances where they play an active role, because concerts and festivals are seen as places where social activism, self expression and sense of community are created.
Technology also allows them to enter the artists’ world in more ways than thought possible. The audience will have to pay for this, of course, which can make extra revenue for the act and for the promoter.
More than ever, live performances will activate all senses, and find new fascinating ways of story-telling, through new technology and more expert use of virtual and augmented reality which has already made videos so exciting to experience because of the immeasurable sense of presence it creates.
Shannon Schlappi of ticketing agency Eventbrite spells out two ways that immersive augmented reality will be used in multi-day festivals.
“Acts can contact fans to alert them to impromptu secret shows or places to meet’n’greet. Brands can trigger treasure hunts via smartphones to find items.”
GENDER EQUALITY DRIVE AIDED BY ADLAND
The entertainment industry’s gender equality drive will get help from adland – a sector that is exasperatedly viewed by the biz as one that purveys the worst kind of stereotypes.
Last year the likes of Unilever, AT&T, Mattel andJohnson&Johnson vowed to drop gender and cultural stereotypical portrayals from their ad campaigns – and this year more companies will follow suit as statistics emerge.
According to a Unilever study,40% of women don’t aspire to, or relate, to women in ads. Men complain they’re made to look stupid and/or knuckle draggers… and dim enough to buy into images presented about women.
Seperate research suggests 25% of progressive ads are more brand effective, while 50% of people in the UK thought brands using out-dated stereotypes are heading for the scrapheap.
With the widening of un-stereotyping and resultant use of personality and emotion in the advertisding world, the question remains, will this seep through to music videos?
RADIO WILL FIND NEW WAYS TO MEASURE LISTENERS
With brands turning to audio as a way to reach consumers, Australian commercial radio will capitalise on this by stressing the wide reach it has via multi-platforms and devices.
Radio networks will expand their podcasting offerings, as well as personalised services for smart speakers and live radio, as well social media and website intergration.
This will increase listener engagement, not only consuming radio but in their relationships with stations and on-air personalities.
According to 2017 stats, 63% of radio listeners engaging with radio, outside of traditional radio listening. One in four spent more time listening to radio after engaging with a radio social media page, and almost a quarter of people said their trust in the radio station had increased because of interacting with the radio social media page.
It’s also expected that audience measurement will aggressively expand to include mobile apps, wearable meters and streaming data.
FACEBOOK MAKES GREATER STRIDES IN MUSIC
After it’s ground breaking multi-year licensing deal with Universal Music Group late last year, it’s expected that Facebook will actively search for similar agreements with other music companies.
Users will be able to include copyrighted music on their videos on Facebook – as well as Facebook-owned entities such as Instagram, Messenger and Oculus – without being hit with a take-down order.
Facebook has also indicated that the wider-picture plan is to expand music integration in it’s platforms to create communities – which would see more music videoshosted on the site,and original and exclusive videos for its new on-demand streaming service Watch.