Another year has come and gone with music events making history. Some predictions from my post from last year were correct: new highs in streaming, the growth of podcasting and music “excitement” in the fitness world, but I totally missed on others – wearables didn’t grow as fast as I expected. Nonetheless, here’s a list of what I feel are the top ten moments in the music business in 2019. The list is primarily in chronological order with some general trends at the end.
1.) February 2019 – Spotify Acquires Two Podcast Companies (and later a third in August)
Spotify made its move into the podcast arena early in the year with two back-to-back acquisitions of Anchor FM for $154 million and Gimlet Media for $195 million. Spotify CEO Daniel Ek believes that podcast listening will be approximately 20% of all listening on Spotify in the years to come.
Why it’s important: This strikes me as the first move for Spotify to embrace the “Netflix” model and expand its content base outside of just music. Consumer music streaming is a business with tight margins and moving to other forms of audio content is a way to improve the income statement. Moreover, similar to Netflix, Spotify is also making moves to now acquire and produce original content like Amy Schumer’s “3 Girls, One Keith” and even the exclusive streaming rights for the current season of “Crimetown.”
2.) March 2019 – “Old Town Road” enters the Billboard Charts – Are Songs Getting Shorter?
Streaming listeners’ attention spans are wearing thin, and artists have taken note of this, creating songs to fit a listener’s short attention span. According to Billboard’s Hot 100, the average song length has decreased from 3 minutes and 50 seconds to 3 minutes and 30 seconds, over the years of 2013 to 2018. 6% of 2018’s top songs were 2 minutes and 30 seconds or lower. “Old Town Road” by Lil Nas X (a stellar example of post-genre pop) came out at 1 minute and 53 seconds. Some music critics feel that artists may be producing shorter songs in larger amounts in order to make more money off of streaming services.
Why it’s important: In the good old days, the “45” or 7-inch vinyl could only hold around 4.5 minutes per side when played at 45 RPM, but songs were typically around 3 minutes max. This all changed when Bob Dylan recorded “Like a Rolling Stone” in 1965 – an unprecedented 6-minute track that had the first two verses and refrains on one side and the remainder of the song on the other. This of course made life difficult for radio DJs who had to physically flip the record to play the entire song. Eventually songs got longer and longer like Zeppelin’s “Stairway to Heaven” (8:02) or the epic “Mountain Jam” (33:41) by the Allman Brothers. But just as all things change, artists (and more likely their labels) are constantly trying to determine what song lengths listeners are more drawn to.
Here’s a fascinating post on song lengths and song structure.
3.) March 20 – Peloton Gets Sued a Second Time for Alleged Music Copyright Infringement
Peloton was initially sued for $150 million on the eve of their IPO announcement, but things got worse for the company which was again sued by music publishers in March for copyright infringement. After allegedly discovering 1,200 more songs used unlawfully, music publishers doubled damages to $300 million. Publishers say that Peloton now has more than 2,200 unauthorized copyrighted musical works.
Why it’s important: This underscores the fact that music licensing is highly complex from a legal perspective but also a data tracking perspective. While Peloton is a highly sophisticated fitness/media/software/equipment platform (according to its S-1), music publishers believed that the company was infringing on the rights of their songwriters. This was a wakeup call for many players in the high-growth and heavily financed fitness segment that rights-holders need to be properly compensated. “Music” is clearly important and is mentioned 174 times in its offering document. As a point of comparison, the word “fitness” is mentioned 551 times.
4.) June 3 – Apple quietly discontinues iTunes and Music Streaming Is the New Normal
Apple shut down iTunes, replacing it with three different streaming apps. For those who like to own their music, the iTunes Store is still available for use, but Apple’s overall shift has focused on the streaming service of Apple Music.
Furthermore, while not music, Netflix stock delivered a 4,000% return – the best performing stock of the decade. It has been the bellwether of streaming success for all forms of media. And yes, the market seems to believe in its potential.
Why it’s important: People are less concerned with owning their music and more focused on the unlimited selection of music they have access to. I think this push for streaming services, in all mediums, is only going to increase from here. It also underscores the market’s positive view on streaming companies.
5.) June 2019 – Music: A Key Component of Exercise
New research by the University of British Columbia was released showing that upbeat music can make a tough workout seem less strenuous. Even as early as the 1950s, science continues to prove that music is a fundamental, powerful component of exercise for most people. Numerous anecdotal surveys and feedback validate these scientific studies. A 2016 study done by the University of British Columbia at Okanagan focused on 24 subjects and H.I.I.T workouts. The study tracked their physiological and emotional responses to music (a variable the subjects of the study were not aware would be the center focus) during their workouts. The study concluded that their heart rates, power outputs, and enjoyment was significantly higher in workouts with music playing.
It’s not a secret that music can make or break a workout. “With boutique fitness locations charging upwards of $30 a class, it’s surprising that people wouldn’t return just because they don’t like the music, but it speaks to how important a great soundtrack is to the quality of a workout,” said Feed.fm COO Lauren Pufpaf. “People would rather eat the cost of an expensive class than suffer through a playlist that clashes with their taste.”
Why it’s important: it would behoove fitness companies to specialize in curated music for their business. The outcome could boost customer satisfaction, retention rates and, inevitably, income.
6.) September 25 – Peloton Goes Public
In September, Peloton opened trade at $27, under its IPO price of $29, initially valuing at $8.1 billion. Shares quickly declined 11%, valuing Peloton at $7.2 billion. Peloton became the second-worst unicorn startup of the year. This may be due to Peloton’s high cost at $39 a month, not including the cost of their bikes, which start at $2,245. Shares have decreased even more since their debut of their controversial holiday ad.
Why it’s important: Regardless of the stock’s performance, Peloton went from an idea to a public company in a matter of a few years. This is a classic example of a startup that completely disrupted the fitness industry – one that has traditionally been plagued by tight margins and low growth – to a new model with high margins and a recurring revenue platform. Many labels view the fitness industry as THE new distribution vehicle for content so we expect to see more and more music consumption as the fitness segment continues to grow with massive venture funding and startups seeking to have their unicorn exit.
7.) October 16 – Richard Branson’s Virgin Fest
Richard Branson announces new inclusive & sustainability-focused music festival, Virgin Fest, for June ’20 in LA. Is this just a savvy marketing move, or will music festivals begin pivoting away from luxe-/exclusive-type events like the failed Fyre Festival and VIP-centric Coachella, etc.? The fest is said to be based on the brand’s contemporary style and notable hospitality. Virgin Fest’s central value will allegedly all be about “inclusivity.” The lineup is said to release sometime in early 2020.
Why it’s important: Branson wants to make Virgin Fest like no other music festival. He wants diverse performers, unparalleled technological experiences, and a “commitment to sustainability.” If Branson follows through, this could heighten the bar for music festivals and competitors will have to match it. This is a stark contrast for typical events that are segregated based on social status, wealth and connections.
8.) November 20 – Apple Music enters the Background Music Sector
Apple Music also announced it will enter the business along with PlayNetworks. While the news came and went without much notice, it’s important to note that the background music sector – meaning, playing music in brick-and-mortar environments – is a billion dollar market.
According to a study by Nielsen, the recorded-music industry is losing almost $2.7 billion yearly due to businesses not streaming music legally. Many businesses, particularly small ones, don’t even know that they need music licensing. Most people prefer to listen to music in stores, but companies need to make sure they are legally paying the rightsholders so that, for one, artists get paid, and two, business owners don’t end up in court.
Why it’s important: B2B background music could be a mutualistic relationship for artists and businesses. It could increase the number of customers and bring in more money for the artists… if licensed correctly. Moreover, as fitness studios like Orange Theory, Soul Cycle and Barry’s Bootcamp rise in popularity, complexity around music licenses will need to be solved.
9.) November 21 – One Trillion Audio and Video Streams
This year, the U.S. passed one trillion audio and video streams for the first time ever, a 31% increase from last year’s streams. In 2013, on-demand streams for the entire year were 118.1 billion. That is a mere tenth of the predicted streaming number for the end of 2019. Much of these streams is the result of Millenials and Gen Z, as 90% of these generations stream music. In our view, these streaming numbers will only increase.
Why it’s important: streaming which was a stark contrast for those who need to own their own content is now the norm. Any marketing program needs to factor in Millenials and Gen Z, particularly if they are the largest streaming audience and voracious consumers of digital content. Whatever the largest streaming audience is, the music industry would be wise to curate their music around them.
10.) Post-Genre Pop is the Future
Post-genre pop is music that tops the charts, but can’t really fit the categories of Billboard. This really began in the early 2000s, when an artist from one genre would collaborate with an artist from another, leaving the definition of “genre” now, well, rather undefined. Millennials, and Gen Z specifically, have really driven these newfound, non-identifying genres of music. This comes as no surprise, seeing that 84% of Millennials say their music taste covers multiple genres. It doesn’t appear that these un-categorized genres are going anywhere anytime soon. “Old Town Road” which I mentioned earlier was considered “Country Rap” and was removed from the Billboard Country charts for not fitting within the genre stereotype causing significant controversy.
Why it’s important: this may give the music industry more of a challenge than they thought they would face. If listeners aren’t identifying with genres, this would make it more difficult to give listeners what they want. But artists seem to be understanding this, as they produce more inter-genre collaborative content. It is a further reminder that music is an artform which changes over time to either lead or adapt to the audience’s tastes.
2019 was an exciting year for music. Spotify has expanded its breadth of content beyond music to adopt all audio content (and likely improve its margins). Peloton had a kerfuffle with the music industry but still went public. It comes as no surprise that streaming continues to grow but it is interesting to note that fitness is becoming more and more of a powerful distribution point for music. As always, the artists we know and love continue to adapt by playing shorter songs and refusing to fall into standard genres making life complex for our overly familiar Billboard rankings.
As for upcoming predictions, music recommendation continues to evolve with the ongoing battle between human curation and computer-based algorithmic engines. Recommendation has first gone from a human endeavor to an algorithmic one and then to a sweet spot that combines the best of both worlds. Algorithms give companies the ability to personalize and process large amounts of data for a lower cost than using human curation. However, nothing beats the sonic landscape that a skilled DJ can paint with clever mixes with cultural references that an algorithm could never determine. Perhaps the “third path” will be a world that successfully combines both aspects.
Curators need to strike a balance between algorithm curation and human curation. Algorithms are generally more efficient, in terms of speed, but not the most efficient in effectively curating the best content for each user. Maybe the “third path” will become an industry standard, in which specialized experts oversee data. More on this to come particularly as artificial intelligence makes advances beyond just fancy nomenclature.
Here are some noteworthy articles on the topic.
I also believe that there will be major shifts in the way labels and publishers work with young companies to expose content and grow audience. In the past year, I have noticed that nearly all of the music industry professionals with whom I have worked have been highly tech-savvy, flexible and more open to creative ways to help startups innovate with their content than ever before. Moreover, I’ve met with numerous startups that are hungry to use music content (and properly license it) to grow their businesses. From music clips under 15 seconds to digital comic books with awesome music to virtual concerts to music-based games while commuting to VR beat-based-boxing workouts to even wickedly fun ways to do karaoke (yes, it’s a guilty pleasure), startups continue to innovate and impress.
The events in 2019 music history have shaped what is to come in the future. Each year surpasses the last, and I think the music events of 2019 have set 2020 for what could be an equally, if not more, eventful year.