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How did we get here?

It's far too easy now to simply say 'the Internet has had a sizeable effect on the music industry'. It's the start to most music business essays, but at the same time it's 20+ years since the Internet first began… so why haven't we moved on? Many might say it's possibly because the pre-internet industry set up a framework for monetization that doesn't fit into the post-internet world. As Terry McBride & Brent Muhle identified in the 'Meet the Millenials' report, commissioned by MusicTank in 2008:

"What must be self-evident, is that technology is not going to wait for the legal definitions of real estate-based property rights to evolve every 100 years, while itself leaping forward every two."

(McBride & Muhle, 2008)

With direct reference to the collision between the cumbersome 'Copyright Designs and Patents Act 1988' (the date alone should ring alarm bells!), and Moore's Law, which tells us that "the number of transistors in a dense integrated circuit doubles about every two years" (Moore. 2016).

Similarly, as the customer base for music became more digitally savvy and access to media became available at our fingertips, the underpinning principles that founded the music industry became challenged. Ultimately the assignment and resulting exploitation of the intellectual property model, that had evolved since recorded music first developed as a mass selling commodity, was under threat from a generational change that learned to expect it for free. Or as close to it as possible.

The long tail

Chris Anderson (2006) had anticipated the market shift in two seminal texts ('The Long Tail' in 2006 and 'Free' in 2008) where he outlined the shift in the marketplace away from The Pareto Principle - also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity.

The principle states that, for many events, roughly 80% of the effects come from 20% of the causes. In music industry terms that meant 80% of the sales came from 20% of the product - a culture of 'hits' monopolised by major record labels.

The tastemakers decided what the public consumed as they had control of the defined marketplace in which we bought it (record shops!). This was all shattered by the new Internet retail spaces of Amazon, Apple and the rest that followed. Anderson (2006) skilfully predicted the new marketplace, the changing rules and ultimately the new infrastructure. He outlines a number of key themes (keep in mind this is in 2006!)

The key themes

The main change observed is the shift in power from the traditional gatekeepers towards the new retailers. Ultimately the impact on the music industry was profound.

Graph showing long tail curve of Products x Popularity

Source: Anderson 2009

What does this mean to the DIY artist?

This change in the marketplace impacted on business models across the whole industry. We will explore the major record labels reaction to the environment in a later blog. But for the self-releasing musician this change brought about a new-found freedom. If we explore some of Anderson's (2006) key themes from the perspective of the DIY artist, they begin to look quite interesting.

Endless choice is creating unlimited demand

The industry led us to believe that the reduction in income was down to piracy alone, but what we were actually seeing was a levelling of the playing field. As a touring and releasing artist I used to sell albums for £15.99! Why? Because the falsely propped up marketplace enabled it. Scarcity models and the law of 'supply and demand' meant that we could charge that. So we did! The average unit price (retail) has more than halved over the last 20 years. Not because of piracy (although this is a contributing factor undoubtedly) but because the democracy in the marketplace meant that the price reduced to a realistic level.

Graph of the average selling price of albums between 2005-2009

Source: ERA 2010

So, whilst consumption grew through numerous emerging platforms, the net revenue per artist was hugely impacted by these factors; a) Reduced unit price b) Competition in the marketplace and c) The loss of the monopoly strangle hold enjoyed for so many years by the major rights holders.

Graph of Global Recorded Music Industry Revenues 2001-2018 (US$ Billions)

Source: IFPI Measuring Music Report 2018

The future of business is selling less of more

The figures above demonstrate the change in marketplace. Consumption increased and, as the industry worked out how to monetise this new environment, so did revenue.

Limited shelf space moves to infinite shelf space

Spotify alone has an estimated 50 million tracks (Business of apps, 2020) and it is important to note that every one of these tracks will have enjoyed at least one stream as a minimum, even if that's just by the artist them self... or their mum. The Long Tail model is such that the revenue for the labels and DSPs sits in the millions of streams… not so for the self-releasing artist.

1000 true fans modelling

We need to understand how this applies to us as self-releasing artists. Lots of streams multiplied by lots of tracks works for Spotify and the DSPs… it also works for the major rights holders who own 87% of the content on Spotify (Business of apps, 2020). But it does not work for the self-releasing artist with smaller reach.

In 2008 Kevin Kelly wrote, and modelled, the 1000 true fans concept and published it in the Techium Blog. Here he discusses a hypothetical concept that if we, as artists, can get 1000 people to invest an 'average weekly wage' in us as artists yearly there is a new business model that will emerge i.e. 1000 x £585 (ONS 2020) = £585,000 potential yearly gross income. Whilst this appears daunting, we need to understand it is theoretical and a model. The reality is in the concept Kelly states in his article:

"To raise your sales out of the flatline of the long tail you need to connect with your True Fans directly. Another way to state this is, you need to convert a thousand Lesser Fans into a thousand True Fans."

What this to means to the artist

What we need to do as artists, and managers, is ensure that we connect with our small fanbase and treat them well. This, in turn, means that they will reciprocate our investment in them and look to buy more across a wider range of products. Streams on DSPs need only be one part of the equation.

With the majority of content on DSPs now owned by major labels (80% of editorial playlist content is from major labels) the chances of us gaining editorial playlist and therefore leading to the 'big' numbers is remote. I'm not suggesting for one minute here that we shouldn't play the game of improving our profile and visibility to promote playlisting chances, however the prudent way is to see our streaming profile as a discovery platform. This is where customers can become fans and ultimately invest in us via our full range of products.

Top tips to engage fans

Tip.1

Reinvest in your website: Create an interesting and engaging place to talk to your fans free of Facebook ads and algorithmic posts. You are in control of this domain and can have it look and feel how you want and engage people in you.

Tip.2

Start a mailing list: Providers like Mailchimp will allow you to create databases of fans that you can mail with early offers and unique purchases… you can even send them some free stuff occasionally. You will be amazed how quickly you start to see this activity grow. Artists I work with see 70% opens and 65% click throughs on mailing list content which is way above the hit rate from any social network site.

Tip.3

Sell D2C (Direct to Customer): That album you made that went to Spotify for £0.004p per track streamed has greater value. Wrap it up nicely (artwork) then sign it. Let your True fans have it for £10. Trust me they will buy it. They will buy vinyl also buy hats; badges; postcards; and anything else you can think of.

All of a sudden, if we use Kelly's model, the match starts to look a little more realistic:

100 fans x £20 spend each on product = £2000. It soon adds up!

Give it a try... you will be amazed!

If you interested in learning more and are serious about progressing in your career as a musician, Order a Prospectus or Apply Now.

There’s going to be a revolution in higher education. It’s going to be the end of the university as we know it, and many of our universities are totally unprepared for it. As I write this WaterBear have announced an exciting new partnership with Falmouth university. This is such an important working relationship for WaterBear.

Both institutions are deeply committed to quality and innovation. Innovation is the key word here. The Music Industry has changed and now Music education must do the same. And because I have this dual career in music and education, I want to compare the devastation that happened in the music industry between 2000 to 2013, with what’s about to happen in higher education. I’m going to explain how this could affect you, your friends and your families, and what you can do about it.

The problem with traditional university

Now, this is the issue: the cost of the degree is going up, while the value of the traditional degree is going down.

It’s unsustainable.

At the same time, there’s been a huge swing in the power balance between universities and students. Universities used to have a relationship with students which was patriarchal, almost parental. Students were subordinated under the authority of the institution.  Now we’ve gone the other way and the interaction is closer to that of ‘customer’ and a ‘service provider’.

Also, the key element of a degree course- i.e the ‘learning’ aspect - has become easily available and free. This is because we’ve all got the internet and we’ve all got phones. Nowadays we all have access to things like YouTube, and subscription-based courses via a google search that cost a few pounds a month. Because of the intense competition out there, some of the content on these courses is staggeringly good; it’s bang up to date and super personalised with one-to-one feedback. We also have access to YouTubers who are giving out amazing content, day in, day out, for nothing. This is the competition for learning now.

So, what’s the issue here? I mean, this is a good thing, right? This is democracy in action; we’re democratising knowledge and it makes university a choice. University is now just one of a number of choices for self-development.

The same thing is true in music. We don’t need record companies anymore. You can put out a record as D.I.Y. artists. We have phones and the internet, so we can reach our audience. Therefore, in 2020 getting a record deal is also just an option. As I said, most would agree that this is a ‘good thing’. So, where’s the problem?

The current landscape of higher education

The problem is that the need to change hasn’t got through too many of the universities yet, and the consequence of not taking this seriously is that the majority of universities are persisting in the business of selling knowledge for a lot of money. Politicians and the establishment have created a situation where this product is very expensive and student support is thin on the ground. But the worst of it is that they’re asking the customers to buy and consume the learning in the least convenient way possible.

Universities package up this product called ‘a degree’ and ask the customer to move to a new city, pay for accommodation, be given a product that’s one-size-fits-all, and work to a timetable that suits an institution. Students are expected to do this and endure the costs for three years. You add it all up and what we’re asking people to do is almost impossible in many cases. It’s not sustainable. It’s not how the world works anymore.

Nearly all the students that we work with tend to have to have a job as well, so they’re really busy. Many young people are burnt out and fed up of it, and it’s preventing older people with responsibilities from accessing higher education at all.

Where are universities heading?

I think I know how this could pan out, because the music industry also had a high value product that suddenly become ‘free’ to consume. In 1994 I had a number 1 album with the band, and it was a brilliant time to be young and in the music business. The labels were manufacturing CDs for about 50p and they were retailing in the shop for more than £15 back then. It was the closest thing to printing money that you could imagine. It continued like this until about 1999 when suddenly file sharing started happening. This meant that anyone could share any amount of music with all their friends all day long. It was free, it was impossible to police and the value of music went from high to more or less nothing.

The music industry lost 80% of its business. Hundreds of billions of dollars over a couple of decades. Imagine what would happen if universities lost 80% of their revenue because the thing, they are selling has become devalued. Imagine what would happen to research activity which was subsidised by student fee income. Could it be that the university in your town in a few years could be a car park, a block of flats or a cinema? Nobody’s talking about this as a possibility. I don’t know why. It might be because no-one expects it to happen. But no-one in the music industry expected 90% of the major recording studios to close when music became free to share either, or they did.

What can universities do?

Unless universities effectively train people for today’s environment and today’s workplace, the credibility of a degree won’t last much longer. Industries are changing much faster than education and many universities are not keeping up with real life. Degrees are reviewed and tweaked every three years. It’s just not good enough.

A lecture content must be reviewed the day you deliver it to make sure that it’s up to date. It stands to reason, because the landscape is changing so quickly. For lectures to be effective, the people delivering the lectures and designing the degrees have to keep their own professional practice up to date. This is because you have to be in the industry to understand it and to teach it. One can’t retire into education anymore. That’s why I’m planning a tour next year and I’m putting a record out the year after that. Unless I’m active in my practice, I’m no use to creatives or to new students.

On top of that, there’s an uncomfortable truth that people in education are resisting right now, but we’ve all got to face it. Our primary role is now one of content creating. The reason for this is that in the real world outside of the university, learning is taking place 24/7, on the consumers’ timetables. Learning can’t stop beyond the four walls of a classroom. We’ve got to create learning communities in higher education on trains, in hospitals, in the workplace, at home, in people’s flats, in coffee bars… because learning needs to be set free.

WaterBear’s part in higher education

We must continue to evolve with the changes that present themselves. We musicians evolved when the music industry changed, and this is what happened:

10% year on year growth in recent years. We’re not selling any more CDs. Instead, we’ve innovated with live music, we’ve figured out how to monetise digital music and we’ve developed D.I.Y. income through direct relationships between fans and artists. Similarly, there are people dragging higher education kicking and screaming into the present day. There is good practice going on, there just needs to be more of it. WaterBear have recently partnered with Falmouth University. This is a great step for WaterBear and our students, because Falmouth University share our commitment to quality and innovation.

No one can change the world on your own and we are very fortunate to have such strong allies. This revolution is already happening. I’m here to remind you that going to university is a choice, in the same way that doing a record deal is a choice for an artist- a tool that they may use in their journey to get them from A to B. My question to you is this: are you going to passively hand over £27,000+ for a course that’s a generic, one-size-fits-all, out of date and not fit for purpose? Or are you going to take control of the future, choose wisely, and take the power back?

In the next blog I’ll be exploring how to make sense of the marketing messages, ask to right questions and find the right answers to make sure that you enrol on a course that is right for you.

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