TMV Predictions For 2012

Well 2012 is hurtling past and we are already into our 10th day of the new year! TMV’s UK staff writer Laura G Thorne and Jakomi Mathews teamed up to come up with our predictions for 2012 – we hope you enjoy them!

Social Marketing & Music
As everyone and their Granny knows, the traditional model of record retailing is so over. (Ask Tower, Virgin and HMV.) Now, every artist, from the humble DIYer to major label darling, is on the social media bandwagon. There’s no controversy there; the only conversation is one of strategy and tactics. Facebook or Google +? (For now, Facebook wins.) MySpace? (Still in the morgue, zzzzzz.) As far as Facebook and Google + using their platforms as a distribution source for fans to buy music (bypassing the label), it would seem that until said platforms accept payment directly, rather than via proxy e.g. Facebook credits, they won’t be widely adopted – people who buy music online are in the habit of doing so via iTunes, Amazon or the artist’s website. Really, when it comes to social, there’s no “special sauce” – it’s just the latest way for artists, labels and the media et al to build awareness, create interest and sell product. It’s (still) all about the songs folks.

Prediction: Based on the fact Google+ witnessed a 100% increase in registered users during December (figure taken from Paul Allen), we believe Google+ will surpass 250 million registered users by the end of 2012 and be a serious competitor to Facebook.

The Live Music Sector:
The vicissitudes of poor economic fortune notwithstanding, some promoters reported that their revenues in 2011 improved over 2010, meaning they lost less money than the year before (even as the number of tickets sold decreased – the prices went up). The broader perspective however is one where the top 1% of fans throw down big bucks – sometimes in the thousands – for premium seats, exclusive backstage meet-and-greets and other “experiences” to the top 1% of artists (though, in the case of Bon Jovi, you get to keep your folding lawn chair). Whether this arrangement is developing enough talent “supply” to fill the stadiums of tomorrow is open to debate. However, 99% of today’s musicians recognise the power of live performance and the fact that concerts and festivals are the ideal place to sell CD’s and merch.

Prediction: we bet that in 2012 concert revenues will hold firm or squeak out a modest increase and that MAMA Group (UK) is sold.

Mobile:
Unless you’ve been living on top of a mountain somewhere, you understand that in 2012 people interact with their world via a smartphone. As someone said, “there’s an app for that”, and that “someone’s” app revenues are poised to overtake that of music downloads in the near-to-medium term. (Apple’s app revenues are also handily beating those of Android, which doesn’t make nearly as much money from their apps as does Apple.) However, for now at least, smartphone use is constrained by available network capacity, which is insufficient to handle demand (and demand is expected to grow tenfold in the next five years according to some studies). Meanwhile, internet and phone service providers are gathering their profits where they may. Verdict: we are living in a mobile world, and as 4G technology is widely introduced the momentum will be unstoppable.

Prediction: Android via Google will become the #1 mobile music platform. What we mean by this is that Google’s mobile music proposition will overtake that of the iPhone.

Cloud Music Will Actually Work
2011 was the year of cloud music locker service launches, with numerous surprises including the fact two companies  – Amazon and Google – launched before Apple. A critical element and/or detail regarding these launches is that Amazon and Google did so without obtaining all of the requisite label licenses. Sadly, this led to lackluster user experiences with both services. Although Apple launched later, its service still lacked a great user experience, which Apple is generally renowned for.

Prediction: We believe cloud music services will finally deliver on what was there over-hyped promise in 2011. We predict this because we know Google is close to securing the licenses required that will enable them to drastically improve the user experience (though we do not know if Amazon is seeking licenses to improve its service as well).

Digital Streaming
Given the poor state of play of the music industry generally revenues-wise, digital has been a potential light in the darkness. Indeed, Spotify is now estimated to have 2 million paying subscribers (of 10 million users reported, though it’s probably higher) since its US launch in July; Deezer states it has 20 million users, 1.4 million paid. However this year artists such as Adele & Coldplay began withholding product from streaming, heralding a shift in attitude in favour of ownership. Bottom line: if one has unlimited access to one’s favourite music for free, why buy it? The Coldplay’s of the world can still generate substantial revenue from physical and digital sales.

Prediction: Emerging artists will continue to embrace digital services for their free promotional value, but the big dogs will find their cojones and in finest Oliver Twist style, ask for more.

Apple vs Samsung
2011 was the year the war of mobile and tablet patents began in earnest. Apple seemed to win the first couple of battles but in December witnessed some sizeable setbacks, including Motorola winning the option to have both the iPad and iPhone banned for sale in Germany. The reason? Because Apple had refused to pay a royalty on an essential element for any 3G phone. The fact is Apple has technically breached both Samsung and Motorola patents since 2008. Apple prevented Samsung from selling its product, so a high payout from Samsung is unlikely (as bugger all products were sold), whilst on the flipside a high payout in the billions to both Samsung and Motorola is likely as a result.

Prediction: Samsung already has the largest smartphone handset market share and this lead will continue to grow. The iPad will lose some market share to Samsung tablets in 2012, but most importantly we believe Samsung will win this battle of patents against Apple.

Will Three Become Two?
With UMG snagging EMI away from WMG in 2011, will three major labels become two? Obviously, UMG could not pick up what has to be regarded as the baby WMG among the big boys, as it would provide clear competition issues with regulators in the US and also the EU. However, that leaves it wide open for newly crowned Sony Chief and septuagenarian Doug Morris to make a move to purchase WMG. It makes logical sense in TMV’s eyes because for two reasons: WMG will struggle to maintain relevance in catalogue negotiations with digital music services. Second, WMG will not achieve the scale and efficiencies it requires, which was the primary purpose of its bid for EMI in 2011.

Prediction: Sony Music will make a move to purchase WMG from Len Blavatnik’s Access Industries. Whether that bid is successful is anyone’s guess.

Global Licensing
As we all know licensing music from labels and publishers on a global basis is an absolute nightmare (and that is being polite). The current systems in place are so antiquated that they belong in the 19th century, and it’s time a fair and equitable 21st century global music licensing system is implemented. The fact that there is no transparency in the deals performing rights societies do with streaming services like Spotify and others is completely unacceptable in this new century.

Prediction: Here at TMV we would like to see a new global licensing mechanism established, as it is in the industry’s own best interest to do so. Yet sadly we believe such a move will be delayed by reactionary performing rights societies. We do however predict some movement in the EU, which will be positive but not as groundbreaking as what is truly needed.

Artists Vs Labels
As we all know labels have been taking numerous advances over the years from digital music startups. Effectively, these advances have been used as ransoms, as new digital music retail services require licenses to be able to sell music online and via mobile. The problem is that when these services go bust (quite often due to excessive upfront advances required by major labels), the labels get to keep the money paid in the advance. TMV would have no problem with this if these same labels actually distributed these advances as they are legally required to do to the artists on their rosters. The problem is that they do not.

Prediction: 2012 will witness at least one massive heritage artist taking its label to court for not paying the artist concerned its legal share of the advances received by the label when licensing its catalogue of music to new digital music startups.

Please do feel free to leave you own predictions and/or comment on our predictions in our comments section below

Related posts:

1. Examining TMV 2011 Industry Predictions
2. TMV 2011 Predictions
3. TMV Music Industry Predictions for 2009
4. TMV Looks back On Our Predictions to See Where We Were Right and Where We Got It Wrong

Posted by Laura Grivainis Thorne on Jan 10 2012. Filed under Digital, featured, Labels. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.