What can music study from the rise and rise of the video video games enterprise?

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The following MBW-Op / ed comes from Kim Bayley (picture inset), CEO of the British Entertainment Retailers Association, whose members include Amazon, Deezer, HMV, SoundCloud, Spotify and YouTube. ERA recently published its 2021 yearbook filled with data on the UK entertainment market.

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As with most things in life, timing really is everything. Just compare the experience of someone who started their music career in 2013 versus their predecessors who started in 2001.

The 2013 cohort has grown seven years in a row so far, while their unfortunate 2001 counterparts suffered the opposite for twelve years, a dozen years of shop closings, layoffs, and constant fear that they might be next.

The happy newcomers of 2013 are enjoying serene times, music is an investor’s favorite and they could forgive the feeling that it has never been better.

Of course, as their elders could tell them, they would be wrong. Despite the last seven years of growth that the UK has seen music revenue [on a retail basis] Having grown by 50%, the music is still a long way from its 2001 peak of £ 2.2 billion. Adjusted for inflation, it would have to be £ 3.7 billion to reach its record high.

Such comparisons could be awkward when celebrating the undisputed power of streaming services in promoting music sales. It is tempting to dismiss it as unrealistic given the extent of the disruption to traditional music sales the Internet has caused.

But there is a real comparison of how we can really deal successfully with technological change and how new formats can be additive instead of substituting. And luckily, we don’t have to look far – it’s a sector that essentially targets the same market and has done so incredibly well for the past two decades: video games.

The UK games market was worth £ 4.4 billion in 2020, almost three times as much as music. More notably, it was worth only £ 815 million in 2000, less than half the value of music at the time.

To put it in context, if the UK music industry had grown at the same rate as games over the past two decades, it would now be worth £ 11.7 billion, not £ 1.5 billion!

So what lessons can we learn from this rise and rise of games? How can we make music as successful as the game market?

Here are just five potential areas to explore. The following points do not claim to be exhaustive, but rather cover some of the most striking contrasts …

1) Comprehensive technology

The proof of history is that every great new technology eventually expands the entertainment market. It is also full of examples from established actors trying to thwart the rise of new media for consuming content.

While music lost important years in the battle against the internet, the gaming business ruthlessly embraced it and developed new game formats to capitalize on its possibilities.

2) Diversity of channels

In the nineties there was a determined effort in the music business to create a new format to be placed alongside the compact disc, with PolyGram – the UK’s largest music company at the time – supporting DCC, the digital compact cassette and Sony supporting the minidisc.

The reason was clear – “We must avoid becoming a uniform format market at all costs”: They recognized that competition between formats creates growth. The increasingly overwhelming dominance of premium streaming means that music is well on its way to becoming an effective single format business again.

Compare that to games where sales of console games are growing again alongside a bewildering number of channels and platforms from direct to console downloads to Roblox to mobile apps and Twitch, each with their own hits.

3) Proactive Marketing for All Demographics

From its origins as an endeavor devoted only to the obsessive – usually male – gamer nerd who can be reached through gamer media, the gaming industry has embraced marketing channels that reach all demographics.

Mothers in grocery stores see climbing frames in front of the store, retirees play Candy Crush and endless variations of Sudoku and Scrabble, teenage kids love Nintendo Switch, while 15-25 year olds play on their phones.

Music may be universal, but only a minority have an active commercial relationship with it. Gaming has perfected the art of turning almost anyone into a paying gamer.

3) Dealing with the limitations of exclusive rights

Copyright may be a key factor in the music business, but the ability of one of hundreds of rightsholders to veto a new idea means that music’s exclusive rights can be an obstacle for many entrepreneurs.

The need for universal buy-in means that too often services report difficulties licensing new services or even features.

Put yourself in the shoes of an entrepreneur who has the choice of making a game that doesn’t require permission to start, as opposed to music where the negotiations can be really Kafka-esque and it’s pretty clear what is the better choice.

This is not an argument against copyright. It’s an argument for using it to encourage new ideas rather than block them.

4) Think of the consumer as equals

Gaming is inherently interactive and engages the consumer in collaborative experiences. Recorded music is by definition a fixed linear performance, but that still leaves scope to better improve the interactivity of the listening experience, known as gamification.

Unsurprisingly, the tremendous growth we’ve seen in digital gaming in particular in recent years has coincided with the tremendous growth in social media. Popular culture is more than ever about the fan as well as the art itself.

There are undoubtedly many other factors, but the most important point is to start a more fundamental discussion of what the music market might be like.

Too often music feels burdened with its history, be it remuneration models from the time of the phonograph, lavish duplications among collecting societies or carefree approaches to data that are more suitable for the days of paper books than for the age of cloud computing.

5) Music has to embrace its future.

True, there is some positive evidence that a growing number of entrepreneurs are exploring options beyond the all-you-can-eat standard of £ 9.99, services like children’s audio platform Yoto or genre specialist Jazzed. And there’s VR, live streaming, and podcasts too.

Music needs them all and more. The gaming business example shows the benefits of developing a portfolio of distribution channels.

If music can crack that, the potential could be greater than any of us can imagine.Music business worldwide

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