16 Oct 2018


As seen in Music Business Worldwide.

Two significant pieces of news in the last couple of weeks look to have heralded a new era for the music business.

First Spotify announced the fact that artists could start to upload their music directly to the platform. The news began the process of Spotify becoming more like YouTube in nurturing a direct relationship with the talent rather than working through distributors. YouTube’s creator services which include free studio space and editing facilities around the world, training, workshops and events have all served to help the video giant lead the way in terms of nurturing the next generation of talent for their own core revenue model - selling more advertising. 

Of course the move by Spotify is similarly linked to revenue and specifically linked to its aims to improve its current 21% gross margins to something like 30%+. The now floated business needs to make more money to be sustainable and so evolving from a pure subscription streaming model into a "platform", offering services to, and realising more value from artists, labels and other opportunities in adjacent markets is core to this. Spotify for Artists is a first step and clearly allowing artists to upload directly improves that dynamic. Ultimately we should expect to see them evolving into a bigger focus on discovery and deeper management of a longer-tail of smaller artists.

Secondly we have heard today the news that Apple has acquired Asaii (a West Coast based startup focused on developing emerging talent analytics and a prediction engine) and rolled them into Apple Music. We’ve watched Asaii closely at Instrumental as, after Sodatone was acquired by Warner Music Group earlier this year, they were our key remaining competitor. We had expectations that they might have been acquired when they announced the platform was shutting down in an email to users - but did expect Apple to be the acquirer.

The news is very interesting as it seems to suggest that Apple is also beginning to strengthen it’s data and insights capabilities in the music sector (alongside the recently completed acquisition of Shazam) and potentially turn its focus on the long tail of independent artists and better identification of emerging talent.

It makes sense of course. At the end of the day Apple Music is all about monetisation of content on the devices it sells and higher margin content will not come from the major labels or studios. But it could come from fresh partnerships with new, fiercely independent artists that are building strong, engaged audiences through open platforms (like Spotify and YouTube) and social media.

So if Apple and Spotify are doubling-down on the long tail of artists and throwing their tech and deep pockets at the challenge of identifying exciting new prospects what does it mean for everyone else?

Clearly very few companies would consider themselves as competing with these giants. But they are heading directly into a world that has, until now, been left to the traditional music companies to mine for talent. The move can’t be ignored.

Fundamentally now I’d say if your talent scouting process - whether handled by one person, a team or a third party - isn’t optimised by technology and data science then you need to ask some serious questions of your commitment to long term growth. The viability of businesses that work with artists (whether labels, publishers, promoters, agents, managers, lawyers and others) hangs on the ability to find and then partner with them. That is just not going to be possible through relying on traditional, manual methods, alone.

The scale of the problem at hand is enormous. There are 3 million independent artists on streaming platforms and they are uploading 20,000+ new recordings everyday. If you want to track the key playlists in Spotify to see the new tracks and artists being added to those critical discovery environments in real time that means watching 12,500 of them. And that’s if you set the bar at only playlists with at least 10,000 followers. If you reduce the bar to 5,000 followers you are tasked with tracking over 140,000 playlists. And what is on those playlists changes constantly.

YouTube has over 500,000 active ‘quality’ music creator channels and in the last 90 days alone they uploaded more than 6 million videos. Tracks are being signed by labels off upload channels like GRM Daily in a matter of hours after they have been uploaded. How are you going to find what matters to your business before your competitors, let alone before Apple and Spotify.

The number of new releases each week is growing at an incredible rate, artists are able to remain independent for longer and longer as alternative routes to funding become available which means very few artists are knocking on the door anymore. You HAVE to go and find them.

So our mantra remains the same. It’s time to properly invest in the scouting process and that means and investment in technology. Double down on lead generation for your business and engage with data science. Scouting has too long been the lowest priority in the music business. It was the job given to the intern or the junior A&R assistant because at the end of the day most companies could just about get away with doing it the old way.

No longer will that work. So forget hiring the intern and start advertising for a Chief Data Scientist. Apple and Spotify have signified their intentions. It’s the sign of the new times.

Get in touch with Instrumental via hello@weareinstrumental.com OR request a demo.