The Future of the Music Industry: the 2011 NARM Convention

The 2011 NARM convention was an experience that reaffirmed ng Connect’s position and trajectory towards delivering next generation services that augment the user experience.

NARM has been the trade association for the music business, providing a central platform for the discussion of industry-wide concerns and spearheading the implementation of initiatives to advance the industry. During the first two days of the convention the emphasis was on the music crash course, which was segmented into 3 parts: Music Marketplace Overview, Artist Economics, and Label Economics.

Panels on the marketplace overview

In the panels on the marketplace overview the following areas were discussed:

  • International market-share, sales trends, and the success pyramid
  • Transition to ubiquity, where performance based sales are more meaningful than unit based sales
  • How to think outside the box and target the future needs of customers

Artist economics addressed:

  • How artists get paid through the different sources of income including royalties & advances
  • The two types of record labels -independent vs. major music group
  • Copyrights, mechanics of royalties, and distribution of publishing income

And label economics and panel discussions covered:

  • Label revenues, with their typical margins and the need for more revenue sources and cost reduction
  • Break even analysis, business models, and music marketing

The underlying theme in each of these sections was how the music industry’s antiquated process had to move towards accommodating a shift in user consumption trends through technology. At various panel discussions and presentations industry experts were adamantly conveying the need for the music industry to become more integrated within the digital value chain rather than fight the shift towards music ubiquity through any device.

During the final two days the panel discussions, breakout sessions, and presentations were focused around this new world. The new world phenomenon was centered around developing artists careers outside of traditional channels, diving into fan-funded albums, the power of film and TV, what analytics actually mean, where the money is, and the new role of publishers in the digital age. A group conversation around the new “battleground” for digital music services in the cloud drew a large audience and was something of particular interest for me and ng Connect.

My perspective from the discussion was that services are transitioning towards the cloud; it’s becoming apparent that the next generation user experience will be a personalized connection between the user and their social network through devices and technology. Regardless of device and platform this device agnostic user experience can only be supported by cloud-based services, giving users what they want, when they want it.

On this note, the topic on “the rise of cloud music services” – the latest technology development where users can store music from their own collection and stream it back through their desktop, mobile phone, or other internet connected devices – was an animated and engaging discussion. Attendees were interested in trying to understand what makes these new services better, to what degree are cloud services relevant (when so many other on-demand music subscription services exist), and whether the size of music collections in the gigabytes is it even practical to upload and manage offsite in the cloud. All of these conversations were around how the music industry will adopt and augment their business models, and approaches to delivering music to their fans, while maintaining and growing top line revenue.

My overall experience was positive. Looking at the convention and what we are working on within the ng Connect program, we’re at the right place at the right time. Most importantly doing the right thing! Focusing on delivering next generation services to enhance the end user experience is where the music industry currently is, and our strategic direction is inline with where the market is going.  Stay tuned for future developments in the music industry from ng Connect, we look forward to incorporating what we have learned into our work.

Adam Stratas
Alcatel-Lucent
www.alcatel-lucent.com

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