Conference Report: New Music Seminar 2014

Hello and welcome to Jari’s report on New Music Seminar 2014, which took place in New York on June 8-10.

The original New Music Seminar was one of the leading industry events in the US during 1980s and early 1990s. The founder of NMS, Tom Silverman resurrected the event in 2009 and since then the event has focused on the future of the music industry.

New revenue projections for music industry

Tom Silverman presented in his opening speech some projections regarding additional revenue streams on top of the various digital music services in the USA. He argued that:

  • Digital radio services such as Sirius XM could generate as much as USD 2 billion each year for labels and artists.
  • Music video advertising could bring another billion to the table.
  • Physical music sales could generate USD 1-3 billion if the industry could generate better and more compelling products. For example, vinyl recordings could generate almost USD 1 billion if the current growth continues.
  • High-resolution audio services could create substantial income from the consumers who find the quality of the sound important.

Tom Silverman stated that on international level the largest growth potential exists in the parts of the world that never had a meaningful music business. This is mainly based on the fast growing popularity of smart mobile phones. Silverman’s grand vision is that the global music sales could be doubled in ten years.

The importance of bundles and smart phones

The future of digital music services was one of the main topics of NMS 2014. It was pointed out that the technological division between downloads and streaming is no longer a valid one but, instead, we should talk about ownership and access models. This is due to the fact that both ownership and access models can be realised both in the form of downloading or streaming, and by using various kinds of business models.

The common nominator for all stakeholders in music business is to serve consumers’ needs and habits. From the business point of view the main aim is to optimise ARPU by serving the various kinds of consumer segments, which do not reflect any longer the traditional demographic groups.

Currently one of the most common ways to increase customer awareness and customer base of digital services is to do bundles. For example, many services are already co-operating with big telcos. Bundles with car manufacturers is nowadays one of the most competed areas as a lot of music listening takes place in cars. The user interface of the car dashboard should be as easy and intuitive as possible. However, this development will take some time to happen in large scale, as the average age of cars in most countries is quite high.

In the future smart phones will be the most important devices for music listening. However, currently as many as 2/3 of all phone subscriptions are pre-paid. This causes many challenges for the music business. The biggest growth is expected to come from developing countries but still less than 30 countries produce more than 90% of the music industry’s revenues on the global level.

Trouble in DC

Most players in music industry agree that the current US copyright system should be revised thoroughly. The fast development of technology, digital music services, business models, and consumer behaviour have lead to a situation where the traditional regulation framework does not work properly any longer in real world.

Some of the hottest topics are the consent decrees of the performing right organisations (PRO) such as ASCAP and BMI. The most acute business issue is whether music publishers can withdraw their digital rights from PROs and license their rights directly, or do they have to either keep or withdraw all the rights.

The publishers want to pull out the digital rights mainly because of the statutory-based tariffs, which the publishers find way too low compared to their rights’ real market value. If the publishers should withdraw all their rights from the PROs, it would create a difficult market situation both in the USA and internationally, and cause many challenges for all parties involved.

This and some other matters such as inequity of songwriters are currently discussed in a political process. The various hearings in DC are spiced up with heavy lobbying by the various stakeholders.






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