Changing value creation models in the music economy · Playlists galore. Digital Media ... celebrities to algorithmically curated music experiences. Digital Media Research Centre

Digital MediaResearch Centre

Changing value creation models in the music

economy

@pwikstrom @qutdmrc


Patrik Wikström


Patrik WikströmAssociate ProfessorPrincipal Research FellowQUT Digital Media Research Centre

Digital creative economy (Music)Computational social scienceTime


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Three shiftsChanging value creation

models in the music economy

T O D A Y


but first…





rival

rous

non-

rival

rous

excludable non-excludable

Common good

(fish stocks)

Common good

(fish stocks)

Private good

(food)

Private good

(food)

Public good

(free-to-air television)

Public good


Club good

(theatre performance)

Club good



live licensing recorded


digitaldisruption


Integrated circuitFairchild Camera and Instrument Company 1961



The New York Clipper, November 3, 1906

loss of control


loss of control


rival

rous

non-

rival

rous


Common good

(fish stocks)

Common good

(fish stocks)

Private good

(food)

Private good

(food)

Public good


Public good


Club good


Club good



Three shiftsChanging value creation

models in the music economy

T O D A Y


industry sectors


licensing recordedlive


live recorded





Music licensing revenues have more than doubled during the

past two decades


The revival of the music publisher


Shift #1: From recorded music to music licensing and live performance.


social and creative fans


Shift #2: From finished products to platforms for co-creative fan-artist relationships.


tools,building blocks &

rewards







Shift #2: From finished products to platforms for co-creative fan-artist relationships.


ownership v access


Shift #3: From a product-based to an access-based logic.


Loyalty, passion, ownership, products

& brands.



& brands.



& brands.


Products. Ownership. Brands.


Products. Ownership. Brands.


service

product

rival

rous

non-

rival

rous


Common good

(fish stocks)

Private good

(food)

Public good


Club good

(theat re performance)


a product-based music economy cannot compete

with “free”

rival

rous

non-

rival

rous


Common good

(fish stocks)

Private good

(food)

Public good


Club good



service

product

rival

rous

non-

rival

rous


Common good

(fish stocks)

Private good

(food)

Public good


Club good



Access-based music services


…have returned many music

markets to growth



…the dominating revenue model

in a growing number of music markets



…remain very controversial



Are access-based musicservices “fair” to creators?

“Bad for music”“Ridiculous payouts”

“Unfair to small artists”“It’s a scam!”


Incumbents’ response to technology-based disruption

DenialCombat

ResignationAcceptance

cf. Kübler‐Ross 1969






What is the controversy about?



0

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0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 115 120 125 130 135 140 145 150 155 160 165

access

ownership

Revenue streams

(1) Do streaming music services generate “enough” revenues?

per track


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

105

110

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120

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130

135

140

145

150

155

160

165

access ‐ accum

ownership ‐ accum


per track

Accumulated revenues


• 2 x 12 new tracks per year• $0.7 x 24 = $17 per year

• 30 min per day (excl. radio)• 10+ tracks per day• ≈3500 tracks per year• $0.005 x 3500 = $17.5 per year

Ownership Access


per user


(2) Are labels fair?

Depends on the deal

Performance or sales?

Breakage?

Shareholder dividends?


Governmental intervention


Shift #3: From a product-based to an access-based logic.


Let’s take this reasoning just a little bit further…



what is the impact on audience behaviour?



Impact on audience behaviour?

E.g. Local music repertoire

%


Can access-based music services really reduce piracy?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Before you used Spotify

After you started using Spotify

How often do you use filesharing services, such as PirateBay?

Never Seldom Sometimes Often


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Time spent listening to music

Time spent searching for music

I play my digital downloads

I discover new music

I share music I listen to with my friends

Amount of money I spend on music

Listen to illegally downloaded music

More Don't know/won't say Less


Practices



Practices E.g.• I listen less to illegally downloaded music: 70%• I discover more new music: 80%• I spend less time searching for music: 70%


Access-based music services shiftthe focus from the collection…


…to the real-time listening experience

https://www.spotify.com/au/arts/serendipity/



how do access-based music

services compete?


May 2007…


today:more or less

identical catalogues


“access” is about to become

commoditized

(commoditization / commodification)



access-based music services look for new

ways to compete


A. Audiences focused on a real-time listening experience

B. Service providers look for new points of differentiation


Playlists galore


Successful music data analytics start-ups have been acquired…


…in the search for the ultimate algorithmically curated playlist


What happens when algorithms make our music

listening decisions?


music is an experience product


peers

brands

awards

experts

mediaexposure


If algorithms take over the listening decisions, audiences no longer need a relationship with artists…


…they only needa relationship with Spotify!


How is this different from other cultural sectors?


What about live music?


Shift #3*: From music celebrities to algorithmically curated music experiences.


Changing value creation models in the music economy

#1: From recorded music to music licensing and live performance.

#2: From finished products to platforms for co-creative fan-artist relationships.

#3: From a product-based to an access-based logic.

#3*: From music celebrities to algorithmically curated music experiences.


thank [email protected]

@pwikstrom www.linkedin.com/in/patrikwikstrom


Documents

Changing value creation models in the music economy · Playlists galore. Digital Media ... celebrities to algorithmically curated music experiences. Digital Media Research Centre