Behind the 10 Biggest Music Business Headlines of 2016

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December 21, 2016

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Rhian Jones takes us through the stories behind the big headlines of 2016, before we put our feet up for two weeks of Netflix, mince pies and mulled wine. 



Wow, what a year 2016 has been. We’ve made two momentous political votes in Brexit and Donald Trump, the effects of which the music industry is bound to see next year and beyond. There’s been a few superstar albums with groundbreaking release strategies, and the departure of some of music’s most revered talent in David Bowie, Prince, Lemmy and Leonard Cohen.

As streaming consumption continues to rise, and picks up revenue in markets otherwise untapped or plagued by piracy, the music business looks set to grow this year for the first time in over 15 years. Tidal is still around after hosting exclusive albums from Rihanna (briefly), Beyonce and Kanye West, but Spotify and Apple Music are king, and Amazon, Facebook and Pandora are the companies set to make bigger inroads into music streaming next. 

As we look towards what will hopefully be a brighter future after a tumultuous year, what were the defining moments of the last 12 months? Read on for the stories behind the big headlines, before putting your feet up for two weeks of Netflix, mince pies and mulled wine.


Who needs a record label?

While the last few years have seen a number of label services, distribution and direct licensing companies pop up, 2016 was all about DSPs chopping even more middlemen out the picture. Spotify first set the tone last year after commissioning original music exclusively for its Running playlists. Then Chance the Rapper made history in May as the first artist to chart the Billboard 200 on streams alone for his mixtape/album, Coloring Book. Those streams happened on Apple Music, where the set was a two-week exclusive, and was directly licensed to Apple from Chance, who owns the copyright completely. 

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Frank Ocean came along soon after, releasing his visual album Endless on Universal imprint Island Def Jam in August, only to follow that up with studio album Blonde one day later via his own label, Boys Don’t Cry, as an Apple Music and iTunes exclusive. It was a subversive move: the new record shifted attention away from Endless, and Universal weren’t aware that Blonde existed prior to its surprise arrival (Endless fulfilled Ocean’s UMG contract). A sign of things to come? 


Apple Music ups its game...

When Apple Music launched in 2015, Spotify founder Daniel Ek tweeted a rather nonchalant ‘Oh ok.’ However, while the rival streaming service didn’t appear to offer anything disruptive on arrival, Apple is sure to have drawn language a little more PG from Ek’s lips in 2016. 

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By last count, Apple Music has secured 70 exclusives to date with some of the biggest names in music including Taylor Swift, Chance the Rapper, Frank Ocean and Drake. It’s win for the artist, who gets a nice cash sum and promotion from the biggest technology company in the world, while Apple gets high profile endorsement for its new music streaming platform, which has now topped 17m subscribers

For consumers who’ve already built their profiles on rival services, it’s a different story. Will Apple continue making such deals into 2017? Or will the reported stance against exclusives from UMG boss Lucian Grainge wind down the controversial practice entirely?


... As Spotify hits back

While Apple splurges on exclusives and expensive marketing campaigns, Spotify has been quietly differentiating itself through curated playlists. Taking a leaf out of radio’s book, the streaming service has been using its multitude of mood, themed and new music playlists to break acts. A good track on Hot Hits UK or Today’s Top Hits has a real chance at making an impact on the charts, and Jonas Blue, JP Cooper and Zayn have all reaped the benefits of that this year. 

Spotify’s worldwide marketing campaign, launched in December, focused on fun stories derived from user-behaviour, making it crystal clear that it’s putting the mainstream music consumer first over specific artist’s fanbases.

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So what’s next? While rumours of Ek relenting his freemium or nothing rule that Taylor Swift so despises mount, Spotify’s George Ergatoudis has hinted at plans to transform playlists into shows, brands, and take them beyond streaming. Are you ready for an If Santa Was a DJ club night?


Streaming vs. radio

What’s radio’s role in the streaming age? Can it still break artists? Are playlist choices adventurous enough? Is it best to approach radio or streaming services first when building a new artist campaign? These are all questions the shift in music consumption has raised over the last year and more, while radio continues to figure out its role in the digital age. 

Consumers turn to streaming or download services when they hear a tune they like on the radio, and sales/streams are reflected in the charts. The spanner in the works arises when you take discovery happening via streaming playlists into account, which provide a lean-back listening experience akin to radio, and renders radio’s role in breaking new music less relevant. 

Predictions for 2017? Expect more artist campaigns to start on streaming, and turn to radio later to power continued consumption. There’s also an opportunity for mainstream radio stations to start championing more independent and alternative music—differentiating themselves entirely from the major label-owned and dominated playlists on streaming services. Will they take it? 


Music industry fights with tech…

Who’s had enough of hearing about the ‘value gap’? Earlier this year, the major labels were lobbying for YouTube to pay the same amount of royalties as Spotify does for the huge amount of music-backed user-generated content it hosts. In Europe, artists and executives wanted legislation that revised the safe harbour rules, while in the US, power manager Irving Azoff led a campaign asking for reform of the Digital Millennium Copyright Act (DMCA). 

Efforts in Europe have resulted in the European Commission proposing legislation that means YouTube needs to take better measures to identify copyright infringing content, and remove it from its service once a takedown notice has been issued (rather than removing it at the request of copyright holders, only for the content to keep appearing, resulting in a game of whack-a-mole). Music companies have asked the US Government for the same measures, and a decision will be revealed when the US Copyright Office completes its review of the DMCA safe harbours provision.


… And gets into bed with tech

Amidst all of that storm, boss of 300 and former Warner Music and Def Jam head, Lyor Cohen, crossed over to the dark side and joined YouTube as Global Head of Music. The move was hot on the heels of former Lady Gaga manager and founder of Atom Factory, Troy Carter, being tapped by Spotify as Global Head of Creator Services. 

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The Carter move made sense: an artist-friendly exec moving over to a major-label owned streaming service to further artist relations when competitor Apple has Jimmy Iovine and Larry Jackson negotiating its exclusives. Cohen to YouTube was a little more puzzling. Will he be helping the music business get more value, monetary or otherwise, from the Google-owned platform? Or is he there to understand the inner workings of YouTube in order to further his career as a music exec later down the line?


The diversity debate

Well, this was long overdue. After a few music industry trade publications were called out for various power lists that were mostly white and male, a light was shone on the lack of diversity in the music business as a whole and award ceremonies, company leadership and the media is under scrutiny like never before. And rather than burying heads in the sand, 2016 saw lots of folks doing more than complaining. 

The great people at A Nation of Billions did their own 30 Under 30 list, female networks grew stronger, more conference organisers started thinking about how to avoid getting named and shamed here, and you’d hope major companies are reviewing their recruitment practices to ensure they have a wide range of employees from different backgrounds (because that’s how you achieve interesting innovation and A&R). 

It’s no longer good enough to hold hands up and blame the status quo, the discussion is out in the open, and if we don’t make efforts that result in positive change, tomorrow’s forward-thinking leaders will continue charging ahead, while the old guard lag further and further behind.


Lifting the lid on secondary ticketing

For the first time, Live Nation Italy admitted publicly to conspiring with secondary ticketing websites (one of which they own) to pass tickets that hadn’t yet gone on general sale straight to Viagogo to sell on for a marked-up price. Since then, ticket touting is set to be outlawed in Italy and the UK parliament have launched a new enquiry into the practice while also investigating the tax affairs of websites like StubHub, Viagogo, Get Me In! and Seatwave. In the US, outgoing President Barack Obama has signed a law that makes it illegal for touts to use computer programmes called “bots” to snap up tonnes of tickets as soon as sale opens.

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Underpinning the practice (that’s said to be worth $8bn a year) are exclusive ticketing partnerships between venues and companies like Ticketmaster and Eventim, that prevent artists and managers having more control over where their tickets end up. Venues take payouts from those companies so the majority of tickets from their shows are sold through that partner, leaving the artist and their team with around 10–20% of the tickets to sell themselves through whichever platform they chose. 

The remaining 80% is therefore controlled by the promoter, venue and ticketing company, who may or may not be motivated to make efforts that quell secondary sellers. Legislation to break up underhand arrangements between venues, promoters and ticketing firms is therefore the most viable long-term solution. A story to keep your eye on.


Mental health and music

Thanks to conference programming, high profile artists and the media, mental health in music is finally being discussed openly. Late night gigs and the temptations they bring, hectic touring schedules, and the transition from stage to sofa all take a toll on the human psyche, not to mention the unique pressures of working in the creative industries. Plus, those working with an artist can encourage problems through bad career advice, and partaking in an excessive party lifestyle themselves. 

Being a full time musician is a discipline that requires training and structure, especially when on tour, and we’ve seen the devastating consequences of what happens when artists who are under a lot of pressure aren’t healthy. The music business is rather unique in that its product comes from human beings, who need to be cared for and nurtured, in order to remain productive.

There’s already a number of initiatives underway to provide support and training which you’ll see the results of next year and beyond. There's no doubt the health and wellbeing of those making music is vital to a prosperous and creative music business in future, and the sooner everyone working in the industry realises that, the better.


Blockchain

Will there be a time in future when artists are paid for their work as soon as it’s used, direct from fans to their bank account? The amount of noise around blockchain in 2016 suggests so. It’s a decentralised database that can’t be bought or owned by a corporation, rather like the internet (although Google certainly tries). An online system takes information of transactions happening worldwide between people and checks they are valid before storing them. It does away with the need for banks and all the money received is done so through cryptocurrencies, which can then be used to fund other transactions. 

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Benji Rogers, PledgeMusic & Dot Blockchain Music Co-founder

The model has the potential to put the artist, songwriter and composer at the top of the music industry food chain, instead of being the last ones to receive a small fraction of the income their music generates. They would be the ones to upload their content and decide who gets a percentage of its earnings dependent on contribution, as per conditions set within a smart contract (essentially an online set of rules). 

Blockchain could provide a solution to problems like disparities and complications in global royalty distribution and licensing as well as enabling new ways of making money from music. However, in order for it to be effective, a large number of people need to be using the database. A widespread system could be ten years or more into the future, by which time the music industry as we know it today will have been completely revolutionised. Get ready!


 

iQ-96Fp-.jpgAbout the author: 
Music industry journalist Rhian Jones is a regular contributor to US title HITS and Music Business Worldwide. She's also written for titles including the Guardian, Independent on Sunday, Billboard, Music Ally, Company, Sunday Telegraph, The Journalist and Music Teacher.

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