Music industry of the future

2 Aug 2012

Musician Amanda Palmer, photographed by Shervin Lainez

With fears that music fans are becoming less likely to pay for music in the digital age, the industry needs new ideas, and there are those who are finding new ways to make and distribute music.

Almost two months ago, a post entitled ‘I Never Owned Any Music To Begin With’ appeared on NPR’s music blog, All Songs Considered, written by an intern for the US public radio network. Emily White admitted that though she had 11,000 songs in her iTunes library, she had only bought about 15 CDs in her lifetime.

With this revelation came 21-year-old White’s assertion that physical music products were not something her generation were prepared to pay for, sparking off an online debate among fans, musicians and industry representatives that has been ongoing in one form or another since the dawn of the world wide web.

Since its inception, the internet has been providing tools that cause problems for the music industry. The potential for disruption is rife, and record labels are so panicked that they’ve resorted to prosecuting their own fans. But, on the other hand, the internet has also helped to promote, distribute and even produce music.

New media ninja

Smart, tech-savvy artists are demonstrating how the industry can adapt, like musician Amanda Palmer, who is no stranger to new media. A popular character on Twitter, Palmer has used the micro-blogging service to arrange ‘ninja gigs’ and impromptu video shoots, and elsewhere on the web has experimented with various forms of online distribution, from free downloads to name-your-price sales on Bandcamp. Most recently, she took the Kickstarter approach, and was wildly successful at it.

Offering gifts for donations ranging from US$1 to US$10,000, Palmer asked fans and philanthropists to support the production of her next album, Theatre is Evil. The campaign raised just shy of US$1.2m by the time donations were closed off, with the majority coming in US$20, US$100 and US$125 chunks – the very packages that came with physical products like CDs and records.

Clearly, there are still fans out there who want this, and Palmer has found an effective way to reach them. “There’s pretty much no better way for me to do business than a direct exchange with my fans and Kickstarter, right now, is a simple and pretty reliable way of doing that,” she says. “I don’t think it’s a gimmick, I think it’s a totally legitimate tool that people will keep using and I would expect to see it explode – it already is exploding.”

A street performer model


$1,192,793: Raised by Amanda Palmer on Kickstarter

2pc: UK average for physical sales of chart singles

 $5.2bn: Worldwide revenue from digital music (2011)

28pc: Internet users access pirate music services

Sources: Kickstarter, Official Charts Company, IFPI

Palmer, who was herself a street performer for six years, is well versed in asking fans to pay for a service up front. “I am constantly proselytising a street performer model, which worked for me,” she says. “You don’t often see street performers out trying to make money in the street with their backs to the audience and no hat out, and that’s the mistake that some artists are making. It actually is very, very easy to get your fans to help and you just have to get over the shame of telling them that you actually have to pay rent.”

In Palmer’s view, all artists need to do is make it easy for fans to support them and they will. “That’s a fundamental truth about audiences and art,” she says.

“In order to crowdfund you need the right crowd, and building that crowd is the hard work,” advises Palmer, who has spent 10 years touring and meeting people after gigs in order to build up the fiercely loyal fanbase that supports her today.

Democratising the industry

As well as artists finding new ways to get their music out there, the music industry is also being shaken up by entrepreneurs who see the industry’s blind spots as their big opportunity, like Denver Thomas, CEO and founder of UK service Music2text.

Music2text lets bands and artists sign up and distribute music through SMS – a basic technology that millions are familiar with and have access to. Once they upload a song, the band can let their fans know the unique code to text to receive the song via a hyperlink. Smartphone and feature phone owners will then be able to access the link directly in order to download the track, while traditional mobile phone owners can just log-on elsewhere to retrieve the file.

If musicians opt to give away their music at no cost to fans, Music2text allows them to use the service for free. If they ask fans to pay for the download (up to stg£1), they are asked to pay stg£20 per song uploaded and 100pc of the sales go straight to them. This democratic approach reflects a new wave in the industry where artists from major labels and unsigned artists are afforded equal opportunities.

“Our business model is: if you want to give away music for free, you can use the system for free,” explains Thomas, however, he also warns artists not to spoil fans with free content.

Don’t give it all away

pull quote

“There’s a balance there that the artist needs to address with this ‘freemium’ psychology that’s out there,” he says. “If you keep giving a music fan free music, you train them to always want to get stuff for free, and that’s part of the trap the industry’s falling into at the front end of music sales.”

Thomas does not believe that fans merely want free music. “That’s not true – they want to be interacted with,” he says. “With an interaction, you can then find the balance of how you move that interaction forward to develop the artist or band.”

Palmer is also an advocate of fan engagement. “If you’re smart, you’ve got a dialogue going with your fans where you’re both equal parts of an exchange,” she says. “And if you’ve been good to your fans and you run your business well, your fans will be good back to you.”

The truth about music fans

You see, it’s not that fans aren’t willing to pay for music any more, it’s that the model for consumption has changed dramatically, and the industry has struggled to keep up.

“It doesn’t matter if you’re signed to a major label for 5m quid or signed to yourself for 50 quid, the major label has the same problem that the bedroom artist has and it boils down to the music fan,” says Thomas. “The music fan accesses music in a completely different way than what they historically used to.”

What Thomas sees is an industry that is ignoring its key consumers. “We’re turning music fans into criminals because we won’t give them what they want,” he says. “It’s criminalising people that are driving the industry in the first place.”

While many artists are staunchly against illegal downloading, Palmer says she “didn’t know there was such a thing”.

“I think the people who are clinging to the concept of illegal downloading are basically avoiding a fundamental truth of the way the world and the internet functions, and it’s a pity,” she adds.

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.