How record labels can create artist subscription channels
In the past record labels have been accused of ‘sleeping at the wheel’ as industry outsiders — MTV, YouTube, Apple to name a few — created game-changing platforms built on the back of “their artists’s” music. Could 2020 be the year they buck that trend? The year when labels take a lead in disrupting their own industry, taking a slice of what traditionally would be considered live revenues?
Here, I outline my thoughts on:
- The growth of virtual shows
- Why the rights around this new type of live show open new opportunities for labels
- How the ‘new live’ can be a ‘trojan horse’ for labels to build D2C subscription channels
Come future-gaze with me.
Virtual gigs — and why they’re becoming a ‘thing’
Whilst the pandemic has closed the doors on the live music industry, it has opened people’s minds to a new way of consuming live music; virtual concerts streamed that you can watch where you want, when you want, on whatever device. No sweaty crowds. No limitations on capacity. With a mixture of ‘real-life’ and avatars driving the shows, coupled with an array of interactive, immersive features.
No, it’s not the real thing. Never going to be.
Nothing can beat the visceral experience of seeing a band live with your mates.
Indeed, let’s park this one; this type of streamed live show is never going to be a substitute for live concerts. Just as radio didn’t kill music. Video didn’t kill the radio star. Nor did VCRs kill the movies.
Virtual concerts are a different ‘live format’. That meet a different emotional need.
And they’re becoming a ‘thing’….
We’ve seen a variety of experiments with the some of the most notable being Travis Scott’s Fortnite gigs (27million unique viewers), BTS’s virtual show in June (756k paying streams with estimated takings of $26m) to the more traditional, beautifully presented, intimate Laura Marling gig at the Union Chapel.
To me, this isn’t just a temporary Corona-replacement for live music, whilst we can’t attend concerts. This is a taster for what will become a new format where the boundaries blur between the real and virtual worlds and the oft-mentioned metaverse becomes a reality, as technology empowers artists to create new types of immersive experiences.
And the green shoots of monetisation are beginning, slowly, to reveal themselves.
Let’s say, for ease of maths, that these type of shows grow into 5% of the live $30’ish bn market. That’s a $1.5bn sized market.
That focuses the mind.
Particularly when this type of streaming service requires a different set of rights to traditional live concerts, and opens the door to a different set of winners around this format……
Why so exciting for labels? Label as disruptor
Well, whilst, traditionally, labels are acknowledged to take the risk — polishing ‘rough stones into diamonds’ as they elevate talent from unknowns into stars — it is promoters who then ‘cash in’ on the live part of their business once artists have built a fanbase. They monetise these live rights. Whilst labels look on enviously.
But, that doesn’t need to be the case with ‘virtual shows’.
A live concert performed to an in-venue audience is a different beast to a stream of a live performance. The labels can manage those streaming rights. Not the promoter.
This is pivotal. A game-changer. It underpins labels’ ability to lead this new virtual live format revolution as the definition and presentation of what was previously considered a ‘live show’ changes.
They need to move quickly, for sure. YouTube, Spotify, Apple etc no doubt will all look at bolting these types of live shows onto their existing customer offerings with ad-supported, subscription and/or pay per view commercial models.
If labels are to realise this opportunity they need to boldly place a bet here. They can lead the market. To put the infrastructure and creative support in place and prove to artists, theyare best placed to maximise the commercial value of these rights.
And if they can, these live rights can be a trojan horse for labels to develop an even more exciting and lucrative product….
What, there’s more? Label as channel-owner
Isn’t it enough that labels can take a stake of revenues in these new live shows?
Could be, but let’s look higher.
Let me quote Lucian Grange, who has stated he wants Universal Music to “be a formative player in shaping and developing the music platforms of tomorrow.”
To me, this new live format can be the catalyst to do just that; for labels to create Direct to Consumer (D2C) artist subscription platforms.
Just as live football is known as the ultimate motivator that compels people to commit to buy a Sky or BT Sports subscription, the high perceived value of live performance from their favourite artists can do the same for music. To drive fans to pay a monthly fee for an on-demand artist channel.
A committed schedule of, let’s say, monthly performances (with a mix of full ‘bells and whistle virtual shows’, acoustic and studio ‘bursts’) will be highly attractive for fans.
Now, just as sports channels support their premium ‘must-have’ football content with ‘nice to have content’ to fill the schedule, labels can supplement this with insightful lifestyle content about their favourite artist, and catalogue with added-value storytelling layered on top to justify value.
Labels sit on a staggering amount of content. It needs packaging and ‘storytelling smarts’ coupled with bursts of ‘artist access’ to bring it to life.
Don’t think 24 hour scheduled TV channel with every show a set duration. Think on-demand video channel. The demand for depth of content is less. It just requires a regular drum-beat of fresh content of value, which with creativity, can be packaged and re-packaged into stuff fans crave. (In my next essay, I’ll expand on the ‘pyramid of content’ that can substantiate a channel).
To quote another industry leader, Spotify’s Daniel Ek:
“The artists today that are making it, realise that it’s about creating a continuous engagement with their fans. It is about storytelling around the album, and about keeping a continuous dialogue with your fans.”
This scheduled feed of content opens the door for labels — rather than the traditional middlemen of HMV, MTV or even Spotify — to build 1:1 customer relationships at scale that monetise fandom.
And they could make a lot of money.
Imagine creating a channel for Taylor Swift. Let’s say, you charge £6.99 a month and for ‘back of the fag packet assumptions’, 1% of her 87 million Twitter followers subscribe….that’s over £100 million a year in new revenues.
That’s before the benefits of owning the customer data and driving cross-promotional sales of physical and virtual merchandise through labels’ merchandise arms such as Bravado and The Thread Shop. Or the ability to leverage the value of these audiences with brand partnerships.
Why now?
Look around. Monthly subscriptions are the new norm in most industries. Whether it be razors (Dollar Shave Club), health (Apple Fitness) or even coffee, with Pret A Manger’s recent £20 a month unlimited coffee offer. Consumers are increasingly embracing this subscription economy, one they are already familiar with in music. These recurring billing relationships deliver huge benefits for companies.
And Covid has clearly prepared the ground for audiences to take an evolutionary leap, where fans embrace virtual concerts in a way that was unimaginable six months ago.
Yes, it is a bold move. It requires labels to take the risk. To move from rights manager licensing their artists’ assets to others. It requires taking ownership as creator, as channel manager, as customer relationship manager, let alone lawyers unlocking this treasure trove of content.
And crucially, it requires labels to demonstrate to artists they are best placed to harness their creativity and, ultimately, make them more money than other technology, promoter or media partners can.
But just as Disney recognised the importance of ‘owning the customer relationship’ and shook up the film and TV industry with aggressive investments in content and acquisitions that underpinned the launch of their D2C Disney+ channel, couldn’t labels do the same?
And how sweet it would be for labels to disrupt their own industry, taking a share of the live market they have coveted for so long, whilst creating a transformative new subscription-driven D2C format.
