It's 2018 and the Music Business is Better than Ever

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Boom, bap, ka-ching
Boom, bap, ka-ching Credit: iStock; Composite by Ad Age

The music business is back.

You could argue it just finally caught up to the technology business. Or that the rise of technology has fueled better music profits.

In fact, both are true.

After a 20-year decline, we are seeing growth—in fact, double-digit growth. Music is being created and consumed at a higher rate than ever before. More artists are on the road touring, which means fans are buying tickets and merchandise. Live music ticket sales revenue will grow from $7.2 billion U.S. dollars in 2015 to $9.1 billion in 2021, according to some estimates. Collaborations between musicians and brands are more prevalent than ever; even vinyl sales are way up (last year, sales in the U.S. grew 25.9 percent to 7.2 million units). Anyone with a laptop can create a radio-ready song from his or her own bedroom.

This is the key to conquering the music revolution.

The most exciting area of the industry right now is streaming--and, with more than 140 million active users and more than 50 million paying subscribers, Spotify is winning the arms race. The main reason we're seeing growth in recorded music is that Spotify, in particular, has expanded access to what amounts to a new music industry. In 2018, as it goes public and its savvy backers start to recoup their investments, Spotify appears set to solidify its dominance.

And sophisticated makers are going to jump on this and build on the back of the streaming platforms.

Stationhead, for example, is a breakthrough technology, in partnership with Apple Music and Spotify, that allows anyone to have a radio station from his or her own phone anywhere in the world. As it gears up to launch this quarter, it has the virality and addictiveness of Turnable.fm, but with an influencer component built in and much more substantial meaningful output that looks to have a sustainable business model. This can lead to more songs being broken and more streams for artists in general—especially meaningful for independent artists with co-signs from platforms with larger followings. Keep Stationhead on your radar.

Another exciting trend is platforms that empower the artist. Splice is a creative hub for the modern musician. It's founder Steve Martocci believes in a world where all musicians have access to world-class tools and content that help them achieve their creative potentials. With their stems and beats in combination with tech they're creating a new age B2B economy in service of musicians.

Companies like SuperPhone, a mobile messaging platform created by musician-turned-entrepreneur Ryan Leslie, are radically groundbreaking, as they give first-person control to the artist of their direct-to-consumer conversations. Early use cases, like Ryan's $2 million independent album cycle run over an inbound SMS campaign, illustrate the transformative power of direct access to fans—a democratization of the data-driven Amazon model where consumer insights reign supreme.

In 2018 I predict we're going to see myriad ICO's (Initial Coin Offerings) in the music space. There's a pressing demand to clear the muddiness in the publishing industry. More transparency in payment is needed. Blockchain is in a position to do that, similarly to UJO, based on the Ethereum platform. More ICOs will sprout while the space is so hot. Some will win and some will flop, but an identified real opportunity for the publishing business, tracking royalty payment streams and for reimagining the liner notes business thanks to Blockchain. It's an area and model within the music industry that's certainly broken and ripe for disruption. And who better to do that than the Crypto-kids?

The holy grail of the music business right now is creating the music company of the future. It was the '90s when the bottom dropped out on record labels selling music at exorbitant profit margins. To be effective, the new label model needs to be engineered to include smaller revenue streams from many angles and maximizing the full business model of artists not just as musicians, but as brands. Companies like Steve Stoute's UnitedMasters is helping pave this way, and more are just behind it.

It's certainly an exciting and inspiring time for those involved. Count on 2018 to be rife with more innovation and disruption from the new generation of makers.

Jesse Kirshbaum is CEO of Nue Agency, a creative music agency located in New York City that sits at the nexus of music, brands and technology

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