Inaugural Barometer Survey: The most pressing issues in music and tech right now

To put it mildly, it’s been a turbulent year-and-a-half for the music industry.

The COVID-19 pandemic decimated the live music sector, putting several artists and their adjacent teams out of work while exacerbating several systemic market forces that were already in play in the industry prior to 2020. Yet, the hard reset of the pandemic also presented an opportunity for large swaths of the music industry to reorganize themselves, question the validity of practices that were otherwise “industry standard” and create space for new forms of expression, engagement and monetization to emerge.

With live music making a shaky return as you read this — and with (perhaps premature) discussion across the music industry of what “the post-COVID landscape” will look like — we thought now would be a good time to check in on how Water & Music readers felt about the impact of the pandemic on their work to date, and what issues will have the greatest impact on the near future of the music industry.

Over the course of four weeks in July 2021, we ran a survey within the Water & Music member community that collected free-text responses to the following questions:

1. What excites you the most about music and tech right now, and why?
2. What concerns you the most about music and tech right now, and why?
3. What is the most underrated music/tech story of the pandemic, and why?

We received responses from 45 paying Water & Music members in total. Below is a breakdown of respondents’ job roles; larger font size correlates with greater representation in our data.

Keep in mind that as you read this report, you’re hearing primarily from the perspectives of industry sectors that are best represented in the Water & Music community, namely startup teams, music marketers, artist managers and employees at record labels and publishers. In case it wasn’t already clear, this is a highly non-random sample for a highly non-scientific study. That said, mirroring similar surveys elsewhere — like the Pew Research Center’s call for opinions on ethical A.I. design and Hot Pod’s call for reader frustrations about the podcast industry — we think free responses from our members capture a rich and illuminating snapshot of how a niche yet influential community is thinking about the music industry today.

To assemble this report, we sorted through everyone’s anonymous submissions, and tagged each response with around three to five keywords that summarized the main themes explored. For each question, we then created word clouds and penned our own analysis of the top three themes that emerged from the free responses, while highlighting the member quotes that we thought illustrated the sentiment in our community around each theme in a particularly interesting or compelling way.

In the below report, member quotes are highlighted in gray boxes. Again, these are all anonymized, and for the sake of brevity and clarity we are not including every single response in our analysis.

We hope this report helps you identify which issues are top-of-mind for industry tastemakers right now, and where the most fruitful opportunities lie to help industry professionals where they need it most.

Question 1: What excites you most about music tech right now, and why?

A. Direct-to-fan models

Back in spring 2020, we predicted that a focus on more on owned, direct-to-fan revenue models, rather than third-party aggregation models, would be one of the biggest music/tech pivots of the pandemic. Indeed, industry professionals and regulators alike have become increasingly frustrated with low streaming payout rates, and/or disillusioned with the algorithmic and commercial interference that is characteristic of many of the dominant streaming services today as they expand into podcasting and advertising tools.

As a result, many artists have begun exploring ways to circumvent these platforms by investing in and monetizing their fan relationships directly, across a wider suite of fan-engagement tools that spans ecommerce, livestreaming, personalized on-demand videos, closed fan communities and other kinds of VIP experiences.

B. Changing attitudes in the music industry

“The industry seems more open to reevaluate and create better solutions to age-old problems.”

“Feels very reminiscent of the uncertainty and delightful inventiveness of the 90s in how tech and art are experimenting together, and the threshold for involvement is becoming much more accessible. And, the idea that old ideas of copyright and value just aren’t going to work in the new systems that are being created, so we have the chance to define new ones.”

“I love that things are constantly changing and evolving. I’m also hopeful that there will be new models that allow for a more equitable music industry – with more money going into the hands of artists and creators.”

While the pandemic hasn’t necessarily been a positive period for the music industry, one silver lining is that the subsequent disruption has encouraged music-industry professionals to question many structures and practices that they had otherwise accepted as given — from streaming economics, to the physical and mental toll of artists spending hundreds of days on the road every year, to the precarity of artists not owning their distribution or fan relationships. Many of our members report feeling energized by the opportunity to reevaluate processes they had previous taken for granted, and to throw the phrase “industry standard” out the window.

C. Data analytics

“More audience data than ever before.”

“It continues to be the simple stuff. The ability to reach global audiences with new music and track its consumption. Then to use that data to double down on marketing spend in particular regions. It’s the simple streaming and marketing pipes — not the NFTs, not the VR concerts / worlds, not blockchain royalties — that really get me excited.“

“The massive amount of data being collected every day that can be used by artists to make more meaningful connections with audiences.”

Interestingly, the rising influence of data analytics cropped up as both a top three positive and negative trend in our survey results — suggesting that there are some conflicting feelings towards the current state of play with data in the music industry.

On the positive side, many respondents cited the ongoing improvement in accessibility and granularity of data analytics, especially fan and audience data, as a more positive trend. As we’ve talked about in our Discord server and in previous hangouts, there’s still an open opportunity for more sophisticated data analytics around non-musical sources — like YouTube and Instagram comments, Twitter threads or Reddit forums — to drive richer understanding of fan sentiment around a song or artist.

That said, as our member quotes suggest above, there’s a seemingly contradictory relationship between the vast swaths of data now available to artists and their teams to analyze, and the ultimate ideal outcome of using data to simplify solutions and fan understanding for artists, rather than make the industry more complex than it already is.

Question 2: What concerns you most about music tech right now, and why?

A. Big tech

“Big Tech! How aggregators and big labels are taking the largest cut and, most importantly, doing so in secret. The lack of transparency can only hurt the industry.”

“The dominance of big tech and their effective subsidization of music experience as a loss leader to create bigger ecosystem tie-in. It’s an unhealthy relation and also forces consumers into the hands of some companies with problematic track records in terms of privacy or, in the case of Apple, the 30% cut and its platform economy.”

“Many platforms stop short of giving artists what they TRULY need. The most important of which is data … What we don’t have are enough tech entrepreneurs who find a way to make money while still giving artists the control they need.”

It’s no secret that publicly traded big-tech companies exert more influence on the music industry than ever before. This power dynamic was only exacerbated during the pandemic, when people’s social lives and media consumption largely shifted online. Video apps like TikTok drove record consumption and label signings, social media platforms like Facebook and Snap signed new music licensing deals to support their respective user-generated content ecosystems and the likes of Spotify and Amazon flexed their capital muscles in podcasting and digital advertising. Meanwhile, Apple, Google and Amazon all continue to market music as a loss-leader to sell other core products like ads, cell phones and smart speakers, seeing the growth of music streaming as just a drop in their bottom-line buckets.

Among our members, the biggest concern in music and tech this year has been the potentially harmful effects stemming from the dominance of these big-tech companies, for consumers, artists and industry professionals alike. We’re already seeing these effects in full force in the “creator economy” outside the immediate music industry, where controversies around apps like OnlyFans illuminate the downsides of artists and online creators not having full transparency into platform finances and fan relationships. The U.K. Government’s inquiry into the economic practices of streaming services resulted in several potentially groundbreaking recommendations for the music industry as a whole, paving the way for concrete, if slow, regulatory changes.

B. Major-label consolidation

“The big labels buying up the indie labels, and the consolidation as the labels fear they will lose a piece of the pie.”

“Content and attention control by the [top] 10% of artists and labels.”

Fears, concerns and tensions around major-label dominance are hardly new in the music industry. However, many community members voiced concerns around the recent commercial practices of the majors, specifically the recent trend of major labels buying up indie distributors and label-services companies, such as Sony Music’s $430 million acquisition of AWAL (which, to be fair, is currently being investigated by U.K. watchdogs).

At Water & Music, we’ve referred to the underlying power dynamics behind major-label dominance in a handful of different ways. One is through the consolidation of incentives: As artists themselves are increasingly diversifying into becoming de facto media brands and creative brands, major labels are forced to diversify into becoming multifaceted media companies — across interests in podcasting, film/TV and gaming — to meet artists’ creative and commercial needs. Another concept is the commodification of independence: Because music distribution itself is such a cutthroat, low-margin and fully commoditized business, most “indie” distributors ultimately get bought out by major rights holders or tech platforms that already have the benefit of larger catalogs under their belts. For better or for worse, every major label now has its own, fully verticalized music distribution ecosystem in-house — servicing everyone from DIY artists releasing their first single, to mid-tier artists who need more formal marketing support, to established artists in more traditional recording deals.

Several of our members expressed concern around the impact of allowing a handful of powerful stakeholders to control the vast majority of music I.P., and how this imbalance could decrease diversity and experimentation in the music that reaches listeners, resulting in a less vibrant and more homogenous music industry overall.

C. Data analytics (again)

“Lack of joined-up data. Need data on a track / artist across platforms.”

“Information overload that sometimes distracts from the artistry! I do love data, but sometimes it is being used as the the only thing that matters, and therefore the music becomes secondary.”

“As data becomes more and more valuable, it’ll become harder for independent artists to access. Every data company will be able to charge ridiculous monthly fees and most people can’t afford that unless you’re part of a large company.”

As we mentioned above, data analytics was identified as a top three positive *and* negative within our survey responses.

The reasons that members gave in a more negative light were varied. Some respondents identified lack of cross-platform transparency and interoperability when it came to both rights metadata and audience engagement data. For instance, certain trends like dark social — which is reportedly responsible for around 84% of all social media traffic — make it enduringly difficult for an artist and their team to track the performance of an ad campaign or song across social platforms. Meanwhile, on the royalty side, some reports peg the amount of streaming royalties that are delayed, misallocated or completely unallocated at nearly $700 million a year.

Other respondents identified a general over-reliance on data in decision-making as their key concern. As the amount of data available to industry decision-makers proliferates and increases in complexity, being able to sift through and make sense of this data will be an increasingly in-demand skill.

Last but not least, the more data that exists in the music industry, the more that power players will treat higher-quality data as a valuable resource and competitive advantage. As data becomes increasingly intrinsic to music-industry decision-making, some of our respondents expressed concerns that the majors could monopolize access to data analytics tools, causing the prices of these tools to skyrocket and resulting in smaller labels being locked out of access to higher-quality data.

Question 3: What do you think is the most underrated music/tech story of the pandemic, and why?

A. The long game (or lack thereof) for livestreaming

“The lack of innovation in the livestream space, considering the millions spent.”

“Abject failure of livestreaming and virtual events to become a viable format for music consumption, even though the format is an inevitability (no has figured it out yet but someone will).”

“I’d love to dig deeper into the long term for livestreaming. I know I’m definitely interested in having more options to live stream (especially with high quality audio and immersive experiences) rather than have to go to a crowded sweaty room.“

You might not immediately think of livestreaming in and of itself as an “underrated” music-industry story during the pandemic. After all, in terms of hype and buzz, livestreams and “virtual concerts” immediately came up on top as a potential savior amidst a particularly disruptive financial period for practically every part of the music-industry ecosystem. From live audio apps like Clubhouse to gaming-centric livestreaming platforms like Twitch and the rise of in-game immersive concerts, artists, labels, promoters and venues were more open than ever to experimenting with live fan experiences online. According to Water & Music’s research, at least a dozen different music livestreaming platforms, including but not limited to Moment House, Flymachine and Happin, have raised venture-capital funding so far in 2021.

And yet, according to our respondents, what might be “underrated” about the music livestreaming story is the relative lack of innovation that’s happened in the past year-and-a-half. Indeed, many of the platforms that are out there still seem to look like band-aids over the temporary wound that COVID inflicted on the brick-and-mortar live sector, rather than valuable experiences than can stand on their own. Staging music livestreams is also still quite complex from a legal perspective, making it difficult to scale pure-play virtual concert platforms to the level of mainstream adoption.

At its core, perhaps the source of people’s doubt about livestreaming is that in the context of business models and artists’ careers, the future of livestreaming is the future of in-person shows, which itself remains precarious thanks to COVID.

B. Crypto/NFTs

“NFTs were talked about a lot, but not so much what developments this has set off and what doors this has opened for revenue generation and democratization.”

“So many stories — but they are all related to shifting consumer behaviors and the macro/micro forces driving them. The reality of digital currencies and related marketplaces, (de)evolution of how fans want to interact with artists, the continued shift to a hybrid virtual-IRL experience, a narrowing of what marketing and engagement drives meaningful return…“

Not surprisingly, our survey respondents were divided in their opinions on crypto and NFTs in the music industry. Looking back at 2021, this trend has driven a large portion of Water & Music’s coverage and research, from our ongoing Music Crypto Dashboard and accompanying music NFT market updates to our reporting on patterns like music companies paying artists’ royalties in crypto. According to our research, even though monthly music NFT sales are down more than 90% from their peak in March 2021, all-time primary music NFT sales have nonetheless reached over $73 million, making the economic and philosophical impact of crypto on artists’ careers difficult to ignore.

While some respondents identified crypto and blockchain as potential vehicles for a much-needed reorganization of how music is valued and how artists are compensated, others expressed a perceived lack of trust and utility in the technologies, both in their responses to this question and throughout the survey as a whole. This suggests that the role crypto will play in the future music industry is still very much in flux, especially as major labels and rights holders are still trying to figure out their place in Web3.

C. Artist income

“Just how difficult it’s been for established musicians and producers to pay bills, and how many of them have exited the industry as a result.”

“It’s still not completely appreciated how well indie artists are doing on Twitch financially compared to every other platform they can meaningfully participate in at their level, and how some of them may not ever do any better anywhere else.”

Outside of industry-insider circles, the disastrous effect the pandemic has had on the income of many musicians has been one of the biggest mainstream music stories of the year.

But while it’s hard to overstate the negative impact of the pandemic, this time period has also afforded many artists the space to reimagine how they structure and manage their careers. For instance, rapid acceleration in the development and uptake of Web3 technologies, and ongoing exploration of building direct-to-fan communities and virtual live experiences, has offered many artists the possibility of more sustainable, diversified and scalable routes to profitability.

Hopefully, the industry will get to a point where it’s no longer “underrated” to center the artist, their craft and their living in this way. After all, the music industry would be nowhere without artists; especially in discussions about music and tech, what is the point of tech innovation if not to help sustain the creativity and connections that artists spark with each other, and with the world?