Key music business trends of 2013, and what they mean for 2014
By Chris Cooke | Published on Wednesday 1 January 2014
With 2013 done and dusted, and a new year now upon us, CMU Business Editor Chris Cooke has picked eight of the key trends and developments that occurred in the music business in the last twelve months, and considers what they mean for the music year ahead.
This full analysis will appear in the first edition of the CMU Digest monthly report, out later this week as part of the new premium service being offered by CMU in 2014. CMU Digest subscribers receive a weekly digest email summarising music events of the week just gone and the one ahead, and a monthly report analysing key trends in the wider music business. Subscribers also support the further development of all of the free news and information services CMU offers the grass roots music community.
To sign up for a CMU Digest subscription at the special rate of £29 for the year, and to receive the 2013 trends report, click here. Meanwhile, here is an executive summary of the key trends and developments in the music industry in 2013…
1: A recovering record industry
Though still some way off those heady days of the 1990s, the recorded music strand of the wider music industry seemed more optimistic this year. Multi-revenue streams are the key. Digital is booming through the diversity of services the labels are now licensing, while opportunities remain in physical through direct-to-fan and premium releases. And moreover, labels are increasingly working with artists on other aspects of their output, and sharing in other revenue streams as a result. Though you feel the real potential of multi-revenue stream record deals, for labels and artists, is yet to be properly realised.
2: The end of EMI
The split and sale of the British music major may have been completed in 2011, and approved by the regulators in 2012, but the final chapter of EMI occurred in 2013. And while Sony and Universal won the EMI publishing and record companies respectively, this year BMG took some catalogues from both sides of the former EMI empire, [PIAS] bought Universal’s label services business, and Warner Music grabbed itself Parlophone and a whole host of ex-EMI units in Europe during the regulator-pleasing divestment mop up. The music rights sector has now adjusted to being dominated by just three major players, and the long-drawn out trauma of the EMI sale seems finally to be at an end.
The UK’s flagship specialist entertainment retailer has ended 2013 in better shape than many imagined, after the HMV Group went into administration last January, resulting in three months of store closures, redundancies and insecurity. The new HMV that has emerged is smaller, but more upbeat, and now in private ownership is not subject to constant financial analysis and speculation. Though whether HMV’s long-term future is assured is another matter – perhaps the record seller should be watching how the labels are diversifying and follow suit.
The latest business venture from entertainment industry veteran Robert FX Sillerman – SFX – continued on a prolific acquisition spree this year, in its bid to become the undisputed major player in what bosses at the firm now like to call EMC: ‘Electronic Music Culture’. An IPO raised another $260 million to fund further takeovers, with festival promoters in the dance genre the main target, though a few tech firms with EMC specialisms have also been bought. The IPO valued the company at over $1 billion, and gave us a measure by which to track what the investment community makes of the recently commercialised (in the US) dance genre. Though a big UK purchase is still to occur; something to look out for in 2014.
5: Digital debates
It felt like there were few big developments but plenty of big debates in digital music this year. The rapidly growing streaming sector got the most attention. The biggest debate centred on the royalties paid by such services. Though the more important discussion was on what kind of streaming businesses have the potential to go mainstream and last the distance: will it be the ‘listen’ services that dominate in the US market, or the full ‘access’ platforms that lead in Europe? And what role does freemium play? Most seem to view their ad-funded services as a marketing channel to promote subscription sales, but the biggest streamer of them all, YouTube, has free at the heart of its business. How full access platform Beats Music fares in the States and listen service iTunes Radio in Europe will be interesting to see. And even more so YouTube’s planned move into audio and subscriptions. As for the royalties debate, let’s leave that alone for now.
6: Copyright changes
So, 2013 was the year that the sound recording copyright term in Europe extended from 50 to 70 years, meaning recordings released in 1963 now have 20y more years of protection. Just as well for the UK record industry, as 1963 was the year The Beatles and the lucrative British rock n roll catalogue began to emerge. Though on the flipside, the UK’s Intellectual Property Office proceeded with its plans to extend the number of exemptions in British copyright law, with the introduction of parody and private copy rights of most interest to music companies. Both new user-rights are likely to go live in 2014, though not without a fight from the labels and publishers.
7: Takedowns and web-blocks
2013 was the year when takedown notices and web-blocks seemed to become routine for the music rights sector, with individual rights owners worldwide issuing a flood of notices to search engines and user-upload services demanding that infringing content, or links to it, be removed, while trade bodies in various countries lobbied domain registries to block infringing websites, and litigated to force internet service providers to do the same. Though the big challenge remains: could the labels ever force Google to instigate blanket bans that stop any pages of named infringing websites from appearing in its search lists? That’s a battle the labels and publishers will continue to fight in 2014.
8: Social Priorities
While commentators may have been a little too ready to write off Facebook in 2013 – the uber-social network remains essential to any new artist building and engaging fanbase – two key messages became ever louder from digital marketing experts in the music business this year. First, YouTube is now up there with Facebook and Twitter on the essentials list, and artists and labels should fully utilise the Google-owned platform to fully capitalise on its marketing and revenue potential. And second, an old mantra, but one shouted even louder this year, no social media replaces the all important band mailing list, with a fan’s email address – and permission to email – key to realising the huge potential of direct-to-fan.
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