Welcome to 2021! One thing I’ve always loved about ushering in a new year is the barrage of musical performances that occur during the last few days of the year. What was at once notable but also expected from this year’s performances was that, in line with everything else in 2020, in-person New Year’s Eve events were moved online, with musicians and fans continuing the celebratory (and economic) tradition mostly through live streaming.
Unlike some of the other changes that have swept the music industry during the pandemic, live streaming has been around forever, occurring nearly every time a significant political, sports or entertainment event takes place. In fact, most of the major TV channels have been live streaming their New Year’s Eve musical performances for years, and this year proved no different. What is interesting is not the increase of live streams during New Year’s Eve this time, but the increase of paid live streams that were attended. According to a list compiled by Billboard, there were dozens of live specials available to American audiences, with more than half of them requiring payment akin to an amount paid for a concert ticket. This seems to make sense, as these live streams served to replace the in-person experiences that fans had previously, where they would pay to spend New Year’s Eve with an artist or group they like at their local concert hall or venue. On the other hand, there were plenty of free live concerts in 2020 - what made fans so willing to pay for a medium that was often (and still is) free?
Whatever the reason, what is clear is that in the past year, the average music fan’s willingness to pay for live streaming has drastically increased. While live streaming has been around on traditional TV, Twitch, and elsewhere for years, data from Bandsintown’s August 2020 survey suggests that fans are becoming more willing to pay for live streams, with 80% of respondents affirming their willingness to pay, an increase of 15% from last April. While the survey data is limited, it’s in line with other instances revealing sentiment around live streaming, such as when K-pop fans were confused why a year-end concert put on by major label S.M. Entertainment that drew 35.8 million views was made available for free, arguing that the quality justified paid attendance. What’s more, if Bandsintown’s survey is a reliable indicator, live streams can expect to continue to see growth, even if in-person concerts were to resume, due to audience expectations to continue interacting with artists through the medium.
Digital Transformation of Live Music
Of the music industry’s three subsectors, recorded music, music publishing & distribution, and live music, the latter has historically been the least affected by digital transformation. The business of recording music was completely upended by the technology and economics of streaming, and technology has also increasingly enabled distributors to provide one-stops for easier publishing and distribution. By its nature of requiring a live, physical experience, however, live music has always been antithetical to digital transformation. And because of its relative scarcity and limited accessibility, live music performances provided a revenue stream that industry players, particularly record labels, were able to control. As a result, live music revenue has exploded in the last two decades; an infographic from Goldman Sachs, shows that revenue from live music was almost on par with that from recorded music in 2017:
For audiences, a large part of the value in attending a live music performance is the creation of an experience between artists and their fans, an intimate space in which both parties can interact. Through recorded music, artists can share their experiences with fans, but on live stages, fans can claim agency in creating the moment with a person or groups whose music they admire, together. While there is no doubt that the need for a shared live experience will always be important, more and more, however, artists and fans alike have learned that these intimate spaces do not have to be physical.
This realization, and the subsequent solution that live streaming provides, has been especially embraced by lesser known artists the past year. According to Billboard:
What has been steady throughout the year, is the separation of major artists (those with 250,001 or more trackers or Bandsintown) and buzzing acts (those with 10,000 or fewer trackers). Buzzing artists have performed over 46,000 livestreams in 2020, or 77% of the total streams tracked on Bandsintown. Major artists account for just 3.9% of the pie, while rising artists (those with between 10,001-250,000 trackers) make up 19.1% of the whole.
Much of this is due to the differences in how major artists and lesser known acts monetize. Because buzzing acts do not see the same streaming revenues that major artists do, they have historically relied on tours and merchandise sales to make up the bulk of their income. Given that the global pandemic has caused most live music performances to move online, it makes sense that lesser known artists are the ones to, first, embrace live streaming as a medium and, secondly, figure out ways to monetize it.
Live Streaming as a Context-Based Service
Buzzing acts still make up the majority of artists that live stream today, but it’s only a matter of time before established artists embrace streaming as wholeheartedly. As it becomes more commonplace for live streaming to be a channel of interactivity between artists and fans, the accessibility audiences have to their artists also increases. This increase in accessibility to live music parallels the ways in which streaming transformed the accessibility and business of recorded music. In an excellent article from 2014, Patrik Wikström describes the effect accessibility had on recorded music:
It is reasonable to assume that eventually all these [streaming] services will asymptotically converge toward a similar music offering and will be available on all platforms and include more or less every song that has ever been recorded. According to basic economic theory, the competition between similar services or products will be based on price, profit margins will eventually shrink, and a few large players will eventually survive and compete in an oligopolistic market. Access-based music services will in other words become a commodity market and behave in a similar way as the markets for sugar or oil.
When the market has reached this gloomy state and the room for innovation and differentiation based on the pure access model is more or less exhausted, online music service providers will most likely look for other ways to differentiate their services and to keep up their profitability. One way of doing this is to go beyond the pure access model and to create services and features that provide a context to the songs in their catalog. The context may for instance enable music listeners a way to search and easily find the song they are looking for at a particular moment, it may allow users to share their music experiences with their friends, to organize their favorite music experiences in convenient ways, etc. Such context-based services provide a less deterministic and far more expansive space for innovation than those services that are based on a pure access model. While innovation within the access-model framework leads toward the same ultimate goal (universal access to all songs ever recorded), innovation within the context-model framework lacks such a knowable outcome. A provider of a context-based music service has a greater possibility to create a competitive advantage based on unique, innovative features than what is possible within the access-model framework.
Wikström was pretty spot-on with his conjectures on where streaming was headed. It’s true that only a few major players (Apple Music, Spotify, SoundCloud, and a few others) have survived in streaming, with little notable differentiation in their catalogues. It’s also true that thus far, personalized discovery has been the key to user retention and platform differentiation - Spotify’s personalized discovery product, Discover Weekly, has been responsible for 2.3 billion hours of listens since its inception in 2015. Moreover, it is true that users’ demand for “services and features that provide a context to the songs in their catalog” is part of why TikTok has been so popular, and why Snapchat has also focused on music features this past year.
Live music is now facing its own parallel shift from an access-model framework to context-based services. This is happening for two reasons: The first is the commoditization of artists by platform. While in the past, an artist could only choose one out of a limited selection of venues to perform at for a given city, it is now possible for artists to live stream on any streaming platform they choose, at any given time.
The second is the accessibility of artists by audiences. Unlike with traditional concerts, live streams are not restricted by physical geography or physical capacity, meaning that audiences globally have unhindered access to their favorite artists. What’s more, access is also no longer limited by time; an ardent fan might have had to skip a concert for scheduling reasons, but most live streams are now recorded and can be played back when convenient.
This sudden increase in access to live music that streaming has provided has already created a wave of context-based services. Platforms have sought to customize the experience fans have with their artists by creating specialized features native to their platform. For example, Twitch created exclusive K-pop emotes, a limited set of emojis that captured K-pop viewers’ customary expressions of affection for a series of Korean artist live streams. As more audiences and artists choose between platforms, I expect live stream discoverability to be a core focus for platforms as well.
For artists as well, the name of the game is no longer fan access, but entertainment value. The inevitability of increased accessibility can be captured aptly by a comment I found at the bottom of an artist’s music video:
Most fans are fans of many artists, and for an artist to encourage fans to consistently view their live streams, much less pay for them, when other streams may be happening can be tricky. But success is possible. Rock artist Melissa Etheridge has since become an emblem of the live streaming artist after establishing a sustainable business model early on last year. As a Forbes article describes, Etheridge began by playing 58 consecutive free shows on Facebook in mid-March of 2020 before transitioning to paid streams. Most of these fans have continued to pay $50 per month in order to view her live streamed shows, where she covers songs, shares personal videos, chats with her audience and allows the audience an opportunity to chat with each other (viewers are let into the streaming portal 20 minutes before the performance, where they often exchange contact information to connect offline). Her viewers justify the entry price because of the production quality and “front row” access of her streams, and a sizable number also pay for merchandise and upgrades to their own viewing equipment. While there are many different business models for streaming (the differences of gaming streamers and mukbang streamers come to mind), music live streams provide new points of engagement for artists for which the live performance is only a context.
Not all music livestreams have experienced the same success, and not all fans are willing to pay a ticket price to watch a music performance (for what it’s worth, Etheridge’s New Year’s Eve tickets this year were $10). What remains is a deep opportunity for artists to reevaluate the way that they can engage with their fans, whether to monetize or to boost their profile. Much like how TikTok users uncovered new music by creating dance challenges, I can see audiences using the length of a livestream to create new music, viral moments, or business ideas. The future that live streaming can bring is unknown, but brimming with possibilities.