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How Can Big Data add $7 Billion to the Music business?

Ever thought about repair­ing the cat­a­stro­phe that music is today with Big Data?

Music is the most social of all our media options with huge loy­al­ty and pen­e­tra­tion. Music has the pow­er to con­nect the world and big data could unlock that poten­tial. If real­tors can hook up with lifestyle brands and archi­tects, why couldn’t brands find a way to team up with music and musi­cians? The part­ner­ing pos­si­bil­i­ties are limitless.

When you real­ly think about data mon­e­ti­za­tion, the music indus­try could explode! What music is lack­ing is the diverse rev­enue oppor­tu­ni­ties beyond pure con­sumer mod­els like sub­scrip­tion and sales.

Accord­ing to the RIAA, in 2003 the music indus­try was at $13 bil­lion, cur­rent­ly it is below $7 bil­lion, that’s a major sea change! The fail­ure is the lack of Big Data usage. Pay rev­enue mod­els like CDs and iTunes is a shrink­ing mar­ket and the con­sis­tent bick­er­ing about roy­al­ties is stamp­ing out their abil­i­ty to see the big pic­ture. Sub­scrip­tion mod­els can’t pos­si­bly be sus­tain­able as a com­pen­sa­tion method for music pro­duc­ers, signed or independent.

Nielsen dis­cov­ered that labels which choose to remove an artist from stream­ing ser­vices may squeeze out eight per­cent in extra sales, but are caus­ing the remain­ing group of lis­ten­ers to vis­it des­ti­na­tions where they can ille­gal­ly down­load that artist’s tracks. Music influ­encers have stat­ed a change in approach must hap­pen. Jared Leto, actor, direc­tor, and musi­cian said recent­ly for Adweek, “When com­mer­cials stop being adver­tis­ing, they can be art.”

Big data could have the poten­tial to sur­pass all the rev­enue lost from phys­i­cal sales. Through the use of col­lab­o­ra­tive mar­ket­ing, social media and mobile ad tech, you could tremen­dous­ly lever­age, the dig­i­tal adver­tis­ing mar­ket. Wil­son Cheng, from weeSPIN says “The veloc­i­ty, vol­ume, and vari­ety of data asso­ci­at­ed with music, lis­ten­ers, and music influ­encers present a huge oppor­tu­ni­ty to extract mean­ing­ful insights that can deep­en user cus­tomer engage­ment, fuel­ing new busi­ness mod­els and cre­at­ing data-dri­ven brand awareness.”

Since data isn’t lim­it­ed to con­fined struc­tures of the old music indus­try think­ing, there’s tons of spaces to inno­vate in and for. At present, music ser­vices are mon­e­tiz­ing at sur­face-lev­el, focus­ing only on what peo­ple are lis­ten­ing to and where they are lis­ten­ing. The sub­scrip­tion space is a huge step back­ward toward what hasn’t worked for the oth­er music out­lets like Pan­do­ra, Spo­ti­fy, Rdio, Beats Music, and oth­ers. Stream­ing rev­enue mar­gins don’t improve with scale, and it doesn’t look like sub­scrip­tion mod­els will com­pen­sate artists fair­ly any­time soon.

Con­sid­er Insta­gram who in the last 2 years has become a vol­cano for adver­tis­ing and brand mar­ket­ing. Com­pa­nies are see­ing more growth there than any­way else and last year the social net­work­ing tool launched inte­grat­ed, care­ful­ly placed adver­tis­ing that slide seam­less­ly with the users’ news feeds. Besides using obvi­ous ban­ner ads and sub­scrip­tion fees, brands are reach­ing the cus­tomer organ­i­cal­ly by mak­ing gen­uine busi­ness rela­tion­ships with social influ­encers. The same idea may be up next for music.

So the­o­ret­i­cal­ly, by con­nect­ing social con­text with con­sumer behav­ior, data can also reveal the DNA of music for tar­get­ed demo­graph­ics. This is like the Roset­ta stone for pow­er­ful audi­ence engage­ment strate­gies that strength­en aware­ness and loyalty.

The artist could choose whether they want to par­tic­i­pate in this data rev­enue pro­gram, and receive fair com­pen­sa­tion based on their own engage­ment with their audi­ence, and each song played via brand chan­nels (i.e. Playlists, sta­tions, etc.) can gen­er­ate rev­enue style clicks through dis­tri­b­u­tion plat­forms like Tunecore or weeSPIN. This allows artists of all sizes to mon­e­tize direct­ly from brand engage­ments gen­er­at­ed by their songs, with­out mix­ing their art form with dis­tract­ing audio or rich media ads. Brands can pay for ana­lyt­ics through plat­forms like these to help build music brand pro­files by select­ing tar­get demo­graph­ics, ter­ri­to­ries, social inter­ests, age groups, and so on.

Real­ly, this is well worth your con­sid­er­a­tion, ever just think “why should I both­er with look­ing at Insta­gram” or any oth­er social net­work? Think about new avenues and ideas when look­ing through social media and the employ­ment pos­si­bil­i­ties. Imag­ine work­ing as a Big Data min­er for a major brand, how cool would that be you hipster!

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