Web 2.0 Expo 5 - Disruption in the Music Industry

My last session today at the Web 2.0 Expo was the brothers Hadi and Ali Partovi from the music service iLike, which according to the brothers is the largest music provider to social platforms such as Facebook, Bebo, Orkut and hi5.

The Partovi brothers were talking about some of the radical changes which the music industry is undergoing these days:

- Albums are being unbundled
- Economic recession
- Squeezed by powerful retailers
- Competing with free (file sharing)
- Digital sales rising, but not enough

But as their own business testifies, the Internet and specifically web 2.0 may have challenged the music industry, but they have also opened up completely new business opportunities.

The Partovi brothers mentioned specifically four areas where there is room for both monetization and innovation.

1. Downloads
2. Artists as channels
3. Streaming
4. Live music


1. Downloads

Trend:
Right now music downloading is moving from the DRM (Digital Rights Management) paradigm to the DRM free paradigm.

Who are the players:
• Itunes
• Rhapsody, Amazon, Napster
• Ringtones: Thumbplay, Jamster

Where does the money come from:
Consumers are paying for downloads

Opportunities:
• Mobile
• Social /enabling discovery through friends
• Syndicated (you can buy music anywhere on the web)

2. Artists as channels

Trend:
• Musicians communicating and releasing music directly to fans
• From albums to continuous release

Who are the players:
• myspace, iLike
• Kyte, Nabbr, ReverbNation

Where does the money come from:
• Advertising
• Subscription

Opportunities:
• Personalization
• Syndication

3. Streaming

Trend:
Streaming is the new downloading

Who are the players:
• Radio: Pandora, lastFM
• Video: Youtube, Yahoo
• On-demand: Rhapsody, iMeem
• Social media: Myspace, iLike

Where does the money come from:
• Advertising
• Subscription

Opportunities:
• Mobile
• Syndication

4. Live Music

Trend:
Rising ticket prices

Who are the players:
• Ticketmaster, LiveNation, Stubhub
• iLike
• Eventful, Songkick, others

Where does the money come from:
• Ticket sales (consumer pays)

Opportunities:
• Personalization: concert alerts
• Syndication: “on tour” notifications
• Social concert tools – invite friends to go to concerts etc. etc.
• Mobile:
o Concert alerts
o Ticket purchase
o Bar codes
o On-site connected experience