Disruption Music: Keynote by Jörg Mohaupt, Member of the Board of Warner Music at the NOAH 2012 Conference in London, Old Billingsgate on the 6th of November 2012.
1. November 2012
MUSIC:
PERMANENT DISRUPTION OR TEMPORARY INTERRUPTION?
2. THE RECORDED MUSIC SLUMP
Deflation:
Market has declined from $28.6 bn at peak in 1999 to $16.7 bn in
2011
Per capita music purchases were $4.8 in 1999 and $2.4 bn in 2011
– 50% decline
Meanwhile music consumption has increased and the live music
market is near its peak
Recorded Music Per Capita Music Consumption
4.8
28.6 27.7 5.0 4.5
30
24.3 4.5
23.5 3.9
25 4.0 3.7
21.2
3.5 3.2
20 18.3
16.7 2.7
3.0 2.4
US $
15
US $ 2.5
2.0
10
1.5
5 1.0
0.5
0
0.0
1999 2001 2003 2005 2007 2009 2011
1999 2001 2003 2005 2007 2009 2011
Year
Year
3. THE RECORDED MUSIC SLUMP
Key Factors Causing Deflation:
Unbundling of the album to single tracks
Collapse of offline distribution and retail
Digital enabling easy piracy
Reduction in quality formats (vinyl → CD → MP3)
Some signs of stabilization now, as digital is overtaking physical
4. THE RECORDED MUSIC SLUMP
'Soft Factors‘
Commoditization of the music
Overabundance
Discovery
?
5. IS THIS THE LIGHT AT THE END OF THE TUNNEL OR A TRAIN COMING?
Digital (downloads and streaming) is overtaking digital
Overall market appears to be stabilizing
Strong anti-piracy momentum
New retail models tailored for mobile that improve monetization
Rebuilding of distribution, also in emerging markets (Itunes, Deezer
etc)
Future shocks in the distribution system still likely, especially in
markets with majority physical business.
Format Change re-invigorating the recorded music industry?
6. EMERGING MARKETS?
Recorded music industry focus traditionally on Western Europe, North America and
Japan. Limited focus on emerging markets
Some very promising trends:
Some of the highest internet engagement (facebook etc)
Rapid growth of smartphone penetration – key instrument for monetization
High economic growth and substantial middle classes
Digital distribution has been limited so far. Amazon, Itunes and streaming
platforms reach limited (Itunes only launched in South America this year, no service
yet in Russia, China, Turkey etc)
Facebook users mm
167.6
60.7 60.5
50.5
39.4 33.2 31.4 29.9 25.3 25
We are excited about seeing Apple and new players like Deezer enticing these markets
7. WHAT DO WE NEED TO DO?
Continue to battle piracy
Establish new digital distribution infrastructure worldwide
Counter commoditization
Re-engage listeners
Music Engages!
Roentgenzenidat Social
8. WHAT IS ACCESS INDUSTRIES DOING?
Significant investment in content → Warner Music Group
acquisition. Continue to develop new music, and not only
pop/EDM
Development and stimulation of new digital formats
Active participation in increasing the quality of consumption
(Neil Young's Pono Hi-Def project and others)
Re-building of distribution (investments in Spotify and Deezer)
Active engagement in developing digital distribution in emerging
markets (Deezer and Itunes)
Other Music related investments that are aimed at improving
consumer engagement (Songkick, Crowdsurge, 8Tracks etc)
9. WHAT CAN YOU DO?
It is not anymore about disrupting the value chain. Napster was
Internet 1.0
Consumers are looking for engagement, quality, discovery and
ease – of – use. Free music is on YouTube
It is about re-engaging listeners with music in the digital ages:
Discovery – where to browse and get advice
Curation – where are today's John Peel's
Identification
Social Engagement
The deflation has happened, now it is time to rebuild in a digital
world.
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