New Music Seminar 2013: Services Talk Getting to $100 Billion

From left: Michael Catalano, Michael Abbattista, Ron Wilcox, Jeff Toig and Michael Reinert (Roger Kisby)

Can the global music industry reach a $100 billion valuation? And if so, how? That was the question of the hour at a panel Tuesday at the New Music Seminar in New York. Panelists including Jeff Toig, SVP of Muve Music, Axel Dauchez, CEO of Deezer and Michael Abbattista, global head of Telecom/ISP Partnerships at Spotify, debated just how high the rebounded music business can go.
 
An early theme of the panel was the role being played by mobile service providers both in the U.S. and around the world. Muve Music launched in the U.S. as a music streaming service bundled exclusively with Cricket Wireless in 2011 and expanded to Brazil earlier this year. Toig said there needs to be more focus on reaching lower income consumers who comprise the majority of the world’s population.
 
“Right now 90 percent of the global music market isn’t being reached by premium streaming services,” he said. “We saw that younger, ethnic and low-income consumers were buying wireless service but not music. It’s a huge segment of the market that isn’t being monetized.”
 
In Brazil, Muve partners with Telecom Italia in a system based around that country’s micro-transaction economy. For 25 cents, customers can get unlimited access to music on their phones for the day. Michael Catalano, managing director of mobile technology company PMTAmericas said the rise of pre-paid phone usage around the world has fueled growth in the mobile carrier business from $1 billion in 2005 to $7 billion last year.
 
Panelist Michael Reinert of Boinc is taking a different approach by targeting phone manufacturers instead of service providers. Boinc, which currently operates in Venezuela and is planning to open in Brazil andArgentina, bundles its unlimited streaming service with purchases of Samsung’s Galaxy S 3 Mini. Once the phone is purchased, customers don’t have to pay a recurring fee to use the service.
 
Regarding challenges to growing the music industry, Dauchez of Deezer took aim at Internet radio companies like Pandora and Apple’s iTunes Radio. Dauchez said that algorithmic radio services that attempt to match a listener’s taste or mood are bad for artist engagement.
 
“People are hearing more music, but listening less,” Dauchez said. “Pandora and iRadio are destroying engagement. Playing a new song for every moment doesn’t build the identity of artists.”
 
Reinert said increasing engagement with artists, including in areas outside of music itself, would play a key role in growing the music industry.
 
“We need to appreciate the relationship between artists and fans beyond just ‘Did you hear the latest song,’” he said. “We need to be investing in the ubiquitous music lifestyle -- the live show, merch, the brand of the band. It’s not enough to reach out to fans, we have to give them ways to reach back.”