We are now well into 2010 and I think that this year will be pivotal for the music and creative industry sectors. Due to the economic crisis and the pain suffered by the financial services sector across the world, we are going to see a renewed emphasis on export led economies. A large proportion of strategy and investment will be on manufacturing, from cars to military equipment. However it’s clear that the creative industry sector will see a huge amount of political and financial investment being piled into it.
In the UK a rather rushed Digital bill was passed before the election. It will surely be amended and altered in the coming parliament. However, whether one thinks it is competent or not, most can agree that it draws a line. It renews the commitment of government and the legislators to protect creative works and the copyright that gives value to the end product and creative output.
Record Labels, which for the last decade (maybe even two decades) have been on the ropes, are now starting to not only find their way in the new digital market but also convert their activities into real money. Old deals are now out of their system replaced with lower advances and production costs. The way product is created is simpler and there is an understanding that as well as having top line acts a large label can play the long tail game as much as anyone else.
EMI, a company we often discuss, has shown that if it were not for its large interest payments on the debt used to purchase the firm, it would be making a healthy profit. This doesn’t help EMI as the debt is very real, however it does show that a label (with a very valuable publishing arm) can make good, real profits. Hence we can conclude that this is a good industry and one worth investing time and money in, whether you are a large company or individual.
Of concern to labels such as EMI will be the upcoming expiration of the copyright in many of the Beatles Recordings. In the USA these still have value due to change in the law to add an additional 50 years, but outside of the USA this will not apply. That is why last year saw the release of the re-mastered Beatles Albums. It was felt that it should be done before everyone else has a go, as with Elvis recordings.
2010 will be a defining moment for ‘free’ ad funded music streaming services. We are seeing more of these services pop up (trying to get on the audience share bandwagon) and they are making sure they can be accessed on as many platforms as possible, from the web to your Iphone or android mobile handset. The only snag in the plan is that they either cannot afford to pay what the label’s are charging or the labels are not really getting a fair return for the right to stream their music. Or in some bases both!
What does this mean? Well in some cases the services will be rolled into larger offerings perhaps part of film or game services. In some cases music services will just be consumed by much larger social networks – could Spotify or similar become part of Facebook for example? After all what made Itunes work was that it was an ancillary service which added value to the cash cow of Ipods and Macs being sold. Perhaps a stand-alone ‘cheap’ music service is an unsustainable concept?
Certainly the idea of selling records, via downloads will become part of the consumer culture again. At long last people are realising that the number of illegal downloads is not related to the number of legitimate, legal downloads. Even though the amount of materially being shared without payment or permission is still very high we have seen a steady growth in the legitimate and legal authorised consumer market.
Indeed it is a marketplace which is now worth a considerable amount of money, and by stores becoming easier to use and tied into people’s handsets, game consoles and other digital platforms with ease they will become the first choice method to get hold of content rather than a file sharing platform which for most people is quite a pain to use, which also brings all sorts of security risks to their computer.
The Digital Economy is dead. Long live the Digital Economy!