the changing music industry. live nation produces over 20,000 shows annually for more than 2,000...
TRANSCRIPT
The changing music industry
Live Nation produces over 20,000 shows annually for more than 2,000 artists globally. I built and ran the global digital division, which is now a top-5 global
ecommerce site generating more than 25 million unique users per month
Currently, investor and board advisor with early stage music, technology, and retail startups; grew a startup from $0 to >$200 million in annual sales in 3 years
Managed $5 billion P&L for a global retailer
Prior experience working with the United Nations, White House, and non-profits
Why should we listen to this guy if he doesn’t even speak our language?
What the F*%k happened to the music industry?
Executives in the Music Industry miss the “good old days”…
And they miss the era of rockstars
Mozart earned about $120,000 per year in today’s dollars--a middle class income
He survived by taking commissions—Can you imagine Lady Gaga writing songs for people’s birthdays?
He died penniless and was buried in a paupers grave
Wolfgang Amadeus Mozart (1756-1791)
Technology was disrupting music even in Mozart’s Day
Enabled a new era in which concert hall music, paid for by subscription, became a bourgeois pastime.
The invention of the fortepiano, an instrument as loud as the harpsichord yet as subtle as the clavichord, made it possible to
play the new music for much larger groups
The new "galant" style was far easier to play than the traditional contrapuntal style, opening performance to amateurs and
reducing the cost of professional productions
There has always been music: percussive banging existed before tools and guttural intonation before language
The past half century isn’t how the music industry “should be” and we have somehow messed it up... It was simply a period
in time when great fortunes and great celebrity was made
Pirates alone didn’t sink the ship…
Recording $100,000+ and many weeks in specialized studios
Nominal cost using protools on a laptop
Manufacturing Massive costs and waste to produce physical product
Endless free digital duplication on demand
Distribution Hundreds of thousands of retail stores across the world iTunes, Amazon, artist sites
Marketing Reliant on radio play and required industry contacts
Social media allow fans and artists to spread the word
Form Factor Records took up a large part of the living room
Music “lives” on your phone (or in the cloud)
Before digital After digital
More people are listening to music than ever before
More people are making music than ever before
…Business models and regulatory frameworks have to evolve to meet the needs of the market
A sunset can look very much like a sunrise
Where to now?
• Embrace technology early rather than fight it
• It is sometimes impossible for legacy structures to adapt; when they can’t they will be replaced. It’s nothing personal—it’s just evolution
What the music industry’s misadventure has taught us
What we have:• Enabling technologies are HERE• Market demand is HERE
What we need to solve:• Effective and transparent rights/royalty
management• Better artist/content development mechanisms• Filters and curation• Investment regimes tolerant of failure and
iteration• Niche strategies that scale
Hollywood just witnessed its lowest summer cinema attendance figures in two decades, with 533.5 million tickets sold this season, a 4% drop from a year ago. Even with the help of inflated 3D movie ticket prices, summer box office, at $4.278 billion, was also down from 2011’s record $4.4 billion.
Where have I heard this tune before?
Cost: $220 MillionGross: $1.5 Billion
Cost: $250 MillionGross: $282 Million
Two little movies
• As revenue declines, media companies become more risk averse
• Place fewer “bets”, but bank heavily on those bets
• Quality declines as the product is tailored to the lowest common denominator
A rush to mediocrity
Customers will tell you what they want
