Policy by the Numbers: From Mixtape to Playlist

From Mixtape to Playlist

Thursday, December 22, 2011

Ten years ago, consolidation in the U.S. music radio market was seen as a threat to creativity. Today, media markets are increasingly more fragmented, vibrant, and competitive than ever before, in ways that were unpredictable just a few years ago.
Recently, Billboard Magazine published an article about “the best ways for emerging [music] acts to get the word out.” Number 1 is being the featured free single on iTunes. YouTube is #2. Pitchfork - an online music magazine that just twelve years ago was a tiny operation in Minneapolis - is #3. Traditional radio airplay doesn’t even make the top 10, except for the “free listen of the week” on National Public Radio’s website.

This article reflects a broader shift in the way music is produced, distributed, marketed, and consumed:

Technology is empowering artists: Data suggests that more music is being commercially released than ever before, and quality appears to be as strong as ever. That’s partly a function of technology lowering the barriers to creativity. More than half the price of a physical CD went to covering the cost of physically making and distributing it. Today, artists are manufacturing entire albums on an iPad, and releasing them directly to music fans online.

Technology is empowering fans: Fans are flocking to online platforms that allow them to customize their listening experience. Between 2006 and 2009, overall music purchases increased by 50% in the U.S., and global digital music sales revenue has grown to over five billion dollars, a 1000% increase over the last six years. It’s true that total sales revenue is down, but that’s largely a result of fans shifting from buying $15 albums to buying individual songs for 99 cents. Today, most consumers are buying or streaming songs a la carte to customize their own experience (and there’s a bigger pool of money than one might think).

Fans are becoming tastemakers via social media: Music is social -- between 1999 and 2009 concert-ticket sales in America tripled, from $1.5 billion to $4.6 billion. Research by GartnerG2 predicted that in 2010 at least 25% of sales would be attributable to features like fan-to-fan recommendations.

But this isn’t a complete shift. Even though the roles of traditional record labels and radio stations are dramatically changing, they continue to play an important role in the ecosystem as they are adapt and thrive on the Internet.

What can be done to clear the way for the next great online music service? Alongside smart enforcement, music rightsholders and start-up innovators are keen to fix licensing. The music industry is leaving hundreds of millions of dollars on the table due to inefficient licensing, and a recent survey of investors found that decreasing the cost and complexity would expand the pool of investors in digital content services by 83%.

In other words: if music and tech work together to accelerate the shift to new music services that give artists and consumers what they want, then everyone wins.
posted by Derek Slater, Policy Manager at Google

Policy by the Numbers

From Mixtape to Playlist

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