The music business survived the software revolution! Next, that revolution is coming for you...

The music business survived the software revolution! Next, that revolution is coming for you...

 

So in a recent speech Daimler Benz CEO Dieter Zetsche has mused about a number of technological and cultural developments he anticipates over the next half decade or so – many of them within the next twenty years. In particular, he considered how software is highly likely to completely disrupt most traditional industries within the next ten years.

 

If that seems a broad claim, and something like more of ‘the usual pie in the sky’ about technology development and its impact on our day to day lives, then consider this;

 

- Uber owns no vehicles yet is the biggest taxi company in the world.

 

- Airbnb owns no property, yet is now the biggest hotel company in the world

 

Neither company even formally existed ten years ago.

 

All of a sudden it is not so hard to see how software, and not traditional owners or manufacturers may hold the trump cards in future.

 

How does this relate to the man at the top of the Mercedes Benz tree..? Well, he goes on to predict that car ownership will become a thing of the past – an un-necessity, as we simply ‘dial up’ a vehicle to take us on a given journey, drop us off and move on. We pay just for the journey, then call another for the onward trip. We aren’t driving the vehicle in this future world of course (the software does that for us), leaving us free to interact with family, work, or take in the views.

 

He forecasts a world where (in fact, it is already here, just not yet on a commercial scale) people are able to scan their own feet, and 3D print an entirely bespoke set of shoes to wear. Unless they’re developing their own software to do so, Nike ought to be, if you’ll excuse the pun, quaking in their boots. Just Do It, indeed.

 

What has all of this got to do with the music industry though..?

 

Well, for anyone who has been in and around the music business since roughly the turn of the millennium, the notion of software as disruptor of traditional business is a wholly familiar one. Illegal file-sharing seems an almost quaint historical footnote now, but for the majority of this author’s career, it was the giant that threatened to invade and overrule the recorded music garden. In fact it didn’t threaten to.  Perhaps taking its inspiration from the aforementioned footwear behemoth, it just did it.

 

The repercussions have lasted well over a decade. The industry has contracted (not entirely a bad thing); six majors became three. Distribution and manufacturing warehouses were cut and sold off, as were major recording studios. Anyone who worked in a major label in the early part of the twenty first century grew wearily accustomed to the daily rumours of mergers, buy-outs, head counts, redundancies and job cuts; many of which morphed from rumour to reality with depressing frequency.

 

The album as the principle musical medium has been replaced by first the track download, and then more recently by the playlist. We don’t even expect to own or buy specific music anymore – we just pay monthly for access to it – any of it, and all of it. Lofts up and down the land must be overflowing with now defunct Ikea CD racks.

 

The industry was heavily criticised; for ignoring the potential of digital file-sharing, for being oh so slow to react when its potential was realised, for not taking ownership of the means of legitimising the new medium (step forward Steve Jobs to take care of that), for taking legal action against those consumers deemed responsible for the most extreme sharing of illegal content. Many of those criticisms were entirely fair.

 

All the while, the recorded music market contracted; by almost a half from its peak at the turn of the century. Let me tell you, that’s not easy for any industry to survive, and certainly not to sustain.

 

All the while, other industries looked at the music industry decline with a sense of dispassionate glee. ‘Should have taken care of business’ they said. ‘Should have seen it coming,’ came the message from up in their ivory towers. ‘Won’t ever happen to us..’ they said.

 

Yet, survived the disruption we have. Streaming (whilst allowing for the fact that principle platform Spotify has yet to turn a profit) has seen global profits at first stabilise, and then increase for the first time in years. Forecasts predict further growth, possibly record growth, on the assumption that streaming will surely increase as we move ever closer towards market saturation – market saturation being something that is currently very far away indeed.

 

So actually for all of us who have lived through the alleged 'death of the music business' since the turn of the millennium, you can feel pretty good about things - we've already lived through, and survived the disruption of the traditional industry, and come out the other end.

 

Firstly iTunes, and more recently Spotify et al own no content (let's overlook the whole 'fake artists' thing a moment), yet have become the dominant means of engaging with recorded music. Songwriters and publishers remain undervalued, it is hard to dispute; yet the tsunami of noise around the ills of illegal file sharing has reduced to a comparative trickle. Youtube and the perceived value gap, secondary ticketing and Google and its apparent unwillingness to downgrade blatant copyright infringing sites attract the industry’s lobbying efforts instead; even though the ugly face of piracy remains a constant – witness the upsurge in stream-ripping in recent times.

 

All of this seemed unthinkable as I stepped into the hallowed offices of EMI for the first time as a full time employee back in the year 2000. I was too excited simply to be moving within the walls of the company who had brought the world the Beatles, Queen and Radiohead to care too much for the piracy storm appearing menacingly over the horizon. My bubble was soon to burst as illegal file sharing hit, and at times, it felt like the recorded music business had gone into a freefall of terminal decline.

 

Stepping into the current day, and the horizon looks a whole lot brighter. There are challenges ahead no doubt, and invariably software will present more disruptive influence in times to come. But let’s just take a moment to acknowledge that as one of the first industries to feel the wholesale impact of technological disruption, we are also amongst the first to come out the other end.

 

People of the music business, you are in fact trailblazers, and I salute you one and all!

 

People of traditional business models, concentrate on your manufacturing and your ownership, and ignore software at your peril. You have been warned…