It’s no secret that the music industry has been one of the hardest hit by the pandemic. In the spring of 2020, Goldman Sachs predicted a 75% drop in live music revenues due to the worldwide shutdown of venues and social distancing regulations, and a 25% drop in the industry overall. Indeed, as of November, live music revenue was down $18 billion, leaving venues, and artists, struggling to survive. Merchandising sales, which are naturally tied to live shows, dropped correspondingly.
Not all the changes were expected, however. Music streaming also had a bumpy year, with revenues plummeting during the initial lockdowns in the spring. Everyone was so focused on the millions of homebound listeners that they didn’t consider the lack of commuters or the effect of hotel and restaurant closures. While the situation improved over the summer, it never reached the heights experts initially predicted. One theory is that these services were competing with the 24-hour news cycle for consumers’ attention. People used their limited listening time to get the latest on the pandemic and social unrest. This was even in more pronounced in the US, as evidenced by a marked decline in streaming in the weeks leading up to the presidential election.
Individual musicians have had a particularly difficult time. Many of them are independent contractors with informal agreements with venues, and thus have slipped through the cracks of unemployment eligibility tied to government relief efforts. (Some might say the pandemic has highlighted the issues already faced by musicians, such as inequitable deals with record labels and streaming services). Thankfully, federal legislation such as The Save Our Stages Act included in the $900-billion stimulus package passed by Congress at the end of 2020, will help keep independent venues afloat until they can fully reopen. Organizations like MusiCares have been a lifeline, providing information and resources to individuals who are in need of financial assistance and/or medical treatment for Covid-19. While these are necessary measures, they will not ensure sustainable success of artists, or the industry, when the dust settles.
The pandemic is not the only factor. In the attention economy, musicians must continually find ways to stay relevant and profitable, and the answer often lies not only in their music but in their ability to reach their fans in other more innovative and unexpected ways.
This is not a new challenge, nor is it the first time the music industry has risen out of chaos to reinvent itself. In the early 2000s, record sales, which had been the bread and butter of the industry, declined dramatically as consumer preferences shifted to digital music. Napster, which came on the scene in 1999, was a disruptive — and many say destructive — force, not only because it was a digital platform, but because it enabled people to share music files for free. This, along with widespread piracy, dealt record sales a blow.
But the real game-changer, however, was when Apple opened the iTunes store in 2003. Now fans could purchase individual tracks for a dollar instead of having to buy entire albums to get to their favorite songs. And it wasn’t just about money, but convenience. With just a few clicks they could group their downloads into playlists for their various activities such as commuting and working out, or for how they were feeling at a particular time. The effect on records sales was devastating, with iTunes effectively cutting them in half — from 943 million CDs in 2000 to 500 million in 2007.
Social media changed the landscape once again, for it allowed musicians to connect with their fans in an entirely new and more personal way. Today, this level of accessibility is a necessary ingredient for success, as fans expect celebrities to post and tweet, not only about their craft but their opinions on social issues, favorite products, and even their personal lives.
Today artists find themselves on the precipice of yet another shift, one that allows them to leverage their social media reach to interact with fans and generate revenue in new and innovative ways. FanVestor is one fully built platform that seeks to facilitate this richer interaction, by capitalizing on recent changes to SEC regulations that allow people to invest regardless of their net worth. With as little as ten dollars, they can become fan-owners of their favorite celebrities in exchange for exclusive benefits and experiences with those celebrities. FanVestor’s first-of-its-kind platform provides an easy path to invest in artists’ projects, as well as offering a glimpse into their lives. It is this 360-degree interaction that turns fans into members of an exclusive club.
Though the future remains uncertain, there is much cause for optimism. With FanVestor and other platforms, artists have more avenues than ever to connect with fans and build their brands and revenues streams. Moreover, Goldman has also forecasted a rapid recovery for the music industry post-pandemic, in part due to an anticipated increased demand for live performances in 2021 and 2022. Their long-term predictions are even brighter, with steady increases each year that culminate in $142 billion in total revenue by 2030–84% higher than the 2019 total of $77 billion.
The challenge for artists will be navigating this new space so they can continue creating the music they love, while being fairly compensated. The solution lies with platforms that combine cutting-edge technology and security with the ability to reach fans on an emotional level.
In my next post, I will discuss the impact on the revenues of products and brands when celebrities are directly involved in the fabric of those brands. In the meantime, go to FanVestor.com to learn about the incredible opportunities we’re offering to fan/owner investors with celebrity related projects and businesses.