WHO IS INVESTING INTO THE MUSIC INDUSTRY?

Since the end of the 20th century, a global shift has occured within the music industry. The demand for Physical Music (CD’s, Vinyl etc.) is heavily falling at the expense of Digital and Live Music. This transformation, which gave a boost to a declining industry, has created an exciting environment for new technologies and fans, who now can access more music than ever before. But how does this transformation impact the way money flows into the industry? Who are now the main actors?

 

NEWFOUND GROWTH

 

Thanks to Digitization (the process of converting information into a digital format), Music Industry has taken a step forward after significantly droping during the first part of the 21st century, changing the way money is distributed throughout the industry.

Record Labels are still the primary investors in Music. No other segment of the music sector invests in artists and the industry as a whole on anything this scale.
In addition to investing directly in artists, music companies also invest, along with distributors, in the fast-developing infrastructure of the Digital Market. Substantial investment goes into Systems that manage the large and complex task of efficiently and securely distributing more than 40 million recordings, videos, and images across multiple platforms. This ensures the right music is made available around the world in the right format.
This investment remains constant as record companies adapt to keep the pace with the needs of each individual digital service.

Streaming Services are also important actors when it comes to investing into the industry. Recently, we have observed Streaming Services like « Spotify » investing into making its own records in collaboration with artists. But still, The Spotify-owned masters are seen internally as something of an experiment, rather than a large-scale disruption to the platform’s catalogue – which, remember, holds over 30 million licensed tracks.

 

MUSIC TECH

 

How about VC’s and Private Investors? How are they reacting to the music industry? For now, investors in this area are still scarce. Indeed, Music Industry is largely viewed as a risky investment with the « licencing » and « value gap » still a topical issue. The financial investors are investing into this area very modestly, yet, mainly through funding platforms (« Kickstarter », « AngelList » etc.), incubators programs, or directly cooperating with artists and music-linked companies.

The Music Industry is widening its scope, however, thanks to major technological advances.
Investments are growingly done and injected into promising and emerging enterprises that are actively developing the Music Tech industry with their innovations. Music Technology (or Music Tech in short), and here more specifically the Digital and Electronic side of Music Technology refers to the the use of electronic or digital instruments, computers, and other equipment by a musician, sound engineer, DJ or record producer to make, perform and record music. Music Tech has always been present throughout history of Music, with innovations transforming the way sound is produced, stored and listened to. With Electronical and Digital Music Tech being the latest descendant, finding its roots in the early 20th century and starting to really develop during late 1960’s with the invention of « synthesizers », instruments that were able to convert electrical signals into sounds. Today, Music Technology is more than ever on the high, with Streaming platforms, bluetooth-connected headphones, or music-editing softwares now part of our everyday lives.

A recent example of Music Tech’s development could be smart speakers, which are now becoming one of the new trends when it comes to Music Tech. Smart speakers are wireless playback devices that often feature voice activated digital assistants, excluding the physical swiping of a screen. According to Forbes, « The time to pay attention to audio (and smart speakers) is now ».

 

With Streaming, Live Music and techological advances becoming increasingly popular, the Music Industry has managed to be back on track, with a $1.1 billion increase (2016) in Global Recorded Music Revenues compared to 2014.
Though, the Music Industry shouldn’t rejoice too quickly. Indeed, the recent years of growth are welcome news, meaning that the nascent streaming market place has begun to pay off. This doesn’t erase 15 years of decline, and some uncertainty about the future. This may change soon, however.