‘Doing things’ with music: the newest arm of the industry

Platforms that allow users to ‘do things’ with content could represent a new age in music distribution. Shutterstock.com

Even though revenues from recorded music have fallen dramatically over the past fifteen years, people across the world are not listening to less music. Actually, they listen to more recorded music than ever before. Recorded music permeates throughout almost every aspect of our daily lives.

Legal online music services combined with illegal online file-sharing services mean that more or less every song is available everywhere, all the time.

But is the notion of simply listening to music becoming outdated?

Legal, access-based music services such as Spotify, Grooveshark, Rdio, etc. are in their early days and are still actively searching for the optimal service and pricing structure that will allow them to compete and survive.

All these services share a similar structure in that they offer users unlimited access to a music catalogue for a subscription fee. Currently, the competition between these services is largely based on the size of their music catalogues and their availability on different mobile platforms.

However, it is reasonable to assume that eventually all of these services will asymptotically converge towards a similar music offering and will be available on all platforms and include more or less every song that has ever been recorded.

According to basic economic theory, the competition between similar services or products will be based on price. Profit margins will eventually shrink, and a few large players will survive and compete on an oligopolistic market. Access-based music services will, in other words, become a commodity market and behave in a similar way as the markets for sugar and petrol.

When the market has reached this gloomy state and the room for innovation and differentiation based on the pure access model is more or less exhausted, online music service providers will be forced to look for other ways to differentiate their services and keep up their profitability.

One way of doing this is to go beyond the pure access model and create services and features that provide a ‘context’ to the songs in their catalogue.

The context may, for instance, enable music listeners a way to search for and easily find the song they are looking for at any particular moment. It may allow users to share their music experiences with their friends, to organise their favourite music experiences in convenient ways, etc.

Such context-based services operate in a less deterministic and far more expansive innovation space than those services that are based on a pure access model. A provider of a context-based music service has a greater possibility to create a competitive advantage based on unique, innovative features than what is possible within the access model framework.

The number of context-based services grows alongside access-based music services. Today, most music services offer both access to music as well as a range of features that allow users to “do things” with that music.

The future of the music industry depends on finding ways to take fans beyond just listening to a recording. shutterstock.com

The primary issue for the customer is not about getting access to music. Rather, the customers’ problem is how to navigate and ‘do things’ with the music they have access to. In essence, customer value is increasingly created by providing the audience with tools that allow them to ‘do things’ with music rather than by providing the audience with basic access to music.

Most online music services - such as the ones mentioned above - provide a set of context-based features. What perhaps is even more interesting is that the context-based logic is appropriated by a number of musical artists and composers that experiment with context-based concepts that go way beyond the traditional song and album structure. They create mobile applications and online services that invite fans into a creative and playful interaction where music is co-created ‘just for fun’ and not in order to create an intellectual property that can be controlled and policed.

These emerging tendencies raise fundamental questions about the definitions of the music industry and music organisations. Will tools and software for playing with music become recognised as a vital part of the music industry? Will it develop into a new core sector of the industry, next to live music, music licensing and recorded music? If so, what will this mean for established music companies, artists and composers?

When live music and music publishing increasingly became important industry sectors in the first years of this millennium, traditional record labels reinvented themselves. They built new capabilities that allowed them to serve as record labels, music publishers, management companies, live music companies, etc. They turned into ‘360-degree music companies’, which had equal emphasis on all three music industry segments.

If context-based services and features that allow users to play with music rather than merely to play music move to the centre stage of the music industry, music companies will need to add yet another new competency to their organisations. Only then will they be able to capture the growing value created by context-based music services.


This is the fourth of our five-part series looking at the contemporary music industry. Click the links below to read the others:

Music sales are waning but don’t blame the pirates

Music streaming revenue structures stacked against artists

Spotify: merging music with social media

Rage against the machine: music TV still important for the Australian industry

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