The old music industry is dead. We’re standing in the ruins of a business built on private jets, Cristal, $18 CDs and million-dollar recording budgets.
We’re in the midst of the greatest music industry disruption of the past 100 years. A fundamental shift has occurred — a shift that Millennials are driving.
For the first time, record sales aren’t enough to make an artist’s career, and they certainly aren’t enough to ensure success. The old music industry clung desperately to sales to survive, but that model is long gone.
Even superstars have it tough. Pitbull — despite having 50 million Facebook fans and nearly 170 million YouTube plays — has sold less than 10 million albums in his entire career. This is the reality of the new music industry, which is built off of liquid attention, not record sales.
Why? Well, the answer lies with us?, ?the Millennials. We’ve taken over the music industry by controlling the two things that matter most:
1. The Demand
The music industry is just like any other big business: It follows cash. Over the past two decades, music has suffered through the CD bubble, torrents, Napster, iTunes (with Apple taking a 30 percent cut of everything) and now, the ubiquity of streaming services, which reduces sales below the already rock-bottom level.
The music industry has been rocked by new trends and over the past few years, has succumbed to a state of near free-fall. It’s clutching whatever few straws are left in an attempt to salvage profit from the remains of its broken business models.
As music becomes more and more entrenched in the digital realm, Millennials have emerged as the dominant consumers. More importantly, we dominate the most promising emerging market for music: mobile devices. We use music, media and entertainment apps more than 75 percent more and social sharing apps about 20 percent more frequently than any other age group.
In a nutshell, Millennials consume the most music and tell the greatest number of people about it. While it’s obvious that consumption is important, why is it so important that we share what we listen to?
The old music industry had a banner metric of artist success: album sales. For years, album sales have been declining and the growth of singles and streaming services have accelerated the trend.
As we’ve transitioned into a digital music economy, new measures of success have emerged. A new generation of artists has hit the scene and they thrive on attention rather than units of music they sell.
The attention has become just as valuable as our likelihood to purchase, as it leads to festival and performance attendance, merchandising sales and other sources of revenue. However, we still won’t buy your music.
Brands know this, too. Companies like GUESS, Red Bull and Steve Madden will pour more than $1.34 billion into sponsoring music venues, festivals and tours this year.
Over a billion dollars will be spent for the opportunity to build customer relationships and brand equity with digital natives. In contrast, the top 10 highest-earning electronic artists last year cumulatively made just over $240 million less than 20 percent of what brands will spend in 2014 to capture Millennials’ attention.
What brands understand is that music is an important part of Millennials’ identity. It’s more than entertainment for us. The music we listen to can be as important as how we dress and influences who our friends are.
Going to festivals and shows is an expression of identity. Brands know that if they can identify with a DJ like Skrillex and his dedicated fan base, they’ll have more than just the consumer’s brief attention. The brand will become part of the fans’ lifestyle.
That’s why Steve Madden is teaming up with up-and-coming female DJs to attract Millennials.
The end result is that the music industry and the big brands are both chasing the new generation of artists; artists who can capture, retain and monetize attention — instead of album sales — and who can keep Millennials interested.
2. The Supply
All that’s required to make a modern record is a computer and a piece of affordable recording software. One of the most powerful professional DAWs (a digital audio workstation, used to produce music) is Logic Pro from Apple, which costs only $200.
Inside the DAW are virtual instruments like pianos, synthesizers and drums, as well as all the necessary tools to edit and produce audio.
Most of the equipment required to create music has been absorbed into the DAW, while the software continues to get easier and easier to use. The end result is that artists can create music more quickly, more efficiently and less expensively than at any other time in history.
Gotye created his song “Somebody That I Used to Know” in his parents’ house near Melbourne, Australia. The self-produced track reached number one on more than 23 national charts and charted inside the top 10 in more than 30 countries around the world. By the end of 2012, the song became the best-selling song of that year with 11.8 million copies sold, ranking it among the best-selling digital singles of all time.
A young Dutch producer named Martin Garrix reached the top of the charts in more than 10 countries with his smash hit, “Animals,” which he produced and released at 17 years old. The song hit number one on Beatport, making Garrix the youngest person ever to receive the honor.
Millennials, who can simply record after class or work, are mostly familiar with this technology, but our open-source attitude toward learning is much more important.
Search “How to use Logic Pro” in YouTube and you’ll find thousands of free tutorials. Sites like Reddit have entire communities with tens of thousands of members who are dedicated to learning about music production.
Technology is cheap and high-quality learning resources are free. As the result, artists have massively successful records without having set foot in a recording studio.
3. Music Discovery Is At An All-time High
It goes without saying that music discovery and music production go hand in hand. However, just as technology has enabled easy music production for young, emerging artists, it has also provided them with a way to reach fans all over the world.
There are the classic success stories like Justin Bieber and Lana Del Rey, of course, but below the YouTube empire rests an entire culture of Millennials who are discovering music online.
Platforms like SoundCloud have more than 250 million active users each month and Millennials discover their music predominately through these digital platforms. Incidentally, when digital natives produce new music, they release it first on the digital platforms.
This is how Millennials are playing both sides of the field: They’re creating more music than ever and releasing it onto platforms where their peers go to discover music.
The music industry middleman has been cut out and a back-and-forth conversation replaced it. Of course, huge stars like Katy Perry still dominate sales, but Millennials are eroding that model with a new, grassroots discovery model.
4. Millennials Are Forming Dominant Musical Teams
Powerhouse songwriting and production teams back dominant artists like Rihanna, Taylor Swift and Katy Perry. These production teams are one of the main drivers that keep the superstar artists on top. Working in teams allows these writers to churn out tons of highly listenable pop tracks.
Now, Millennials are breaking down this final barrier, too.
Services like FindMySong are connecting independent musicians so they can form their own dominant songwriting and production teams. The FindMySong model takes advantage of the fact that there are more independent musicians than ever before who want a piece of the major artist success without the major label strings.
With cheap recording technology and an effective way to distribute the music, these independents team up online to rival major labels.
You have the power now. What are you going to do with it? For the first time in its long history, the American music business is firmly in the hands of the artists and the consumers. You have the ability to lead the industry wherever you want it to go.