Digital Economy Handbook Infographic: Impact of Data Factories on the Music Industry
This blog is dedicated to the Digital Economy Handbook 2018, a project undertaken by VCA-Spaces team members. In this handbook, we examine data factories in different industries to uncover the effects of the IT revolution on the business environment. The blog will highlight one of these industries every 2-3 weeks with the goal of getting your input on the topic. You can leave your input in the comment section below. Any significant contributions will be rewarded with a free copy of the Digital Economy Handbook 2018.
This instalment of the blog highlights the role of the data factory in the music industry. The contemporary music industry is much different than in thew early 2000s. As is displayed in the pie charts below, artists previously relied heavily on revenues from record sales, which were mostly from physical products such as CDs. Fast forward to 2016, when data has fully disrupted the business environment, and the income of artists is mostly dependent on live performances. Recorded music is not distributed by means of physical copies but rather through streaming sources. Despite pretty high royalty fees, most artist view streaming platforms as a way to reach a broader audience, thereby aiding their other income drivers (mostly live performances), rather than as their primary source of income. Recorded music has thus shifted towards becoming a marketing tool for the artists.
The trend discussed above can easily be observed when looking at the market capitalizations of the 3 largest streaming companies versus the three largest record labels. The market caps of companies in the 'old' music industry are significantly lower than the ones from the 'new' streaming companies.
The music industry is changing rapidly. How do you think artists will earn their money in the future?