by Jackie Peters
The Disruption in the Music Industry session at Web 2.0 Expo NY was one I wanted to make sure I attended. I have a keen interest in the way that the social web is effecting the music industry.
Brothers, and iLike founders Ali Partovi and Hadi Partovi are two pioneers who genuinely understand the potential of the social web to reshape the music industry. While old-school industry heavies have been doing their best to avoid the impending transformation, the Partovi brothers have embraced the opportunity presented and offered artists new ways to monetize and strengthen their brands through closer engagement with fans.
The brothers Partovi gave a clear and concise breakdown of how the shifting landscape in online music has diminished more traditional monetization opportunities, but at the same time created new, and potentially more lucrative ones. While physical record sales are tanking online record sales are growing, and new revenue streams are surfacing.
Downloads
The brothers highlighted emerging trends in the online music space that offer new opportunities. DRM-free music is one trend that they highlighted, sighting that the format allows for expanded innovation and the signal that labels are finally embracing technology.
Artists as Channels
Artists can now establish a deeper level of engagement, and additional monetization models by creating what they referred to as “direct to fan media channels” – artist channels that utilize blogs, video messages, live streaming performances and interviews to create personalized, syndicated streams that fans can tap into and share. Players in this space are channels like MySpace, iLike, Kyte, Nabbr and ReverbNation. Revenue can be generated from advertising as well as subscription models. As an example, the Partovi brothers sighted the band U2.
U2 has leveraged the iLike platform to create a space where their fans can feel more connected and engaged with the band, and it works! The band has nearly 3 million fans on iLike, versus just under 200,000 friends on MySpace. iLike offers a suite of tools to leverage the passion of fans and extend that passion out to their social circles on a variety of networks in addition to the main iLike site.
Live Performances
While album sales are taking a nose dive, ticket sales are at an all time high, and there is a clear path to monetization; sales of physical goods being more reliable than advertising or subscription models. Platforms like iLike, LiveNation and StubHub take advantage of social discovery, alerts and recommendation engines to help bands connect with their fans and fans connect with each other to generate awareness, excitement and attendance for live events.
Streaming
According to the brothers “streaming is the new downloading.” Sites like Pandora, LastFM/CBS, AOL, Video YouTube, Yahoo, Rhapsody, iMeem, MySpace and iLike all offer streaming music. Revenue opportunities in this space come from advertising and subscription models. New opportunities highlighted are mobile and syndication.
Announcing the iLike Music Platform
The brothers also announced the new iLike Music Platform, a developer platform that will allow anyone to add playlists and iLike functionality to their own websites and Facebook applications.
It’s refreshing to see the music industry finally starting to wake up and take notice, thanks to innovators like Hadi and Ali who recognized opportunities early and rose to the challenge. I like to think that the music industry is an early indicator of the direction other industries are heading in. Music makes the most sense as an early entrant as it’s main products can be produced, warehoused, sold and distributed entirely electronically. I think it’s time for other industries, including film and consumer goods to get an early jump on things and take heed to the lessons taught by the music industry.