Plugged In: Industry Executives on 2021 and Predictions for 2022
The year's final edition of Plugged In reflects on the music business' key developments and looks ahead with expectations for 2022.
Welcome to Plugged In, a newsletter that features the unfiltered thoughts of the CEOs, decision makers and power players at the intersection of technology and music. I’m Micah Singleton, Billboard’s director of technology coverage. I lead Billboard’s reporting on the streaming music ecosystem and the startups that bridge the gap between two of America’s most important exports.
This week: In the year’s final edition of Plugged In, a two-part event looking back at the key events and developments of 2021, and expectations and predictions for the music industry in 2022. Thanks for reading and see you in January!
A Look Back at 2021: What Developments Will Shape the Future of the Music Industry?
This year brought a flurry of interesting and promising developments to the music industry. Interest around Blockchain technology took off, with NFTs becoming a particular focus for the music industry, gaining serious funding and attention for companies in the space. The creator economy continued to grow, as companies retooled their strategies to fit the next generation of musicians. And the metaverse came to the forefront, quickly becoming a focus for music and tech behemoths alike. In a year full of innovation and change, I asked our participants what caught their eye, what won’t stick around, and what they expect will help shape the music’s future.
“2021 was the year of audio-visual becoming a regular part of the music industry, it’s hard for me to think of a major release that did not include a major audiovisual component when there was a biopic, an Oprah special, an Apple TV special, an Amazon special or a Netflix special,” one chairperson says. “We all knew that audio-visual was going to become an even bigger part of music and music releases, but this year was the year that it really came to pass, and the fan reaction was great, and it did what it was supposed to do. It became another source of revenue in addition to promoting the music itself.”
“There’s way too much momentum and real foundation in the metaverse, blockchain, the creator economy, and Web3,” a senior executive says. “There’s just too much momentum to think that that’s not going to continue to grow. The other area is the shift to digital advertising. I think we have finally seen the levee break on brands understanding the value and the reasons why they have to shift a much larger amount of their advertising spend to digital. I think in the last 12 to 18 months — again, very COVID impacted — I think we’ve seen that shift and I don’t think that’s a temporary shift. I think it’s now a permanent shift that’s accelerated. We’ll look back at this period as the period when that really, really took hold. I think both areas are heavily impacted by COVID. It doesn’t mean that they wouldn’t have happened otherwise.”
“I think it’s pretty clear that there is a premium that people are willing to pay over the consumption cost of music,” one prominent investor says. “And the question is how big that premium is, but it’s not going away. If you look at the NFT market rate for notional ownership of an NFT that gives you no functional benefit, people are willing to pay lots of money. So that says to me that there’s some premium that people are willing to pay over the cost of consuming music for music they love. There’s clearly a lot of hype now. Some of it is not real, not organic, but I don’t think that’s going away.”
On the opposite end of the spectrum, many executives called out developments they see as fads that won’t stick around – at least not in their current forms. The most notable of these was livestreaming. “Livestreaming, it still hasn’t had a moment,” one CEO says. “I think livestreaming needs to be more than just trying to replicate the live concert. Hit artists can always have hit events. It’s not complicated. Where’s the middle class? Unless you get the middle class, it’s just not enough to create sustainability. And I think the middle class is not there yet. Someone needs to come out as a front-runner. I think there needs to be a bunch of acquisitions or one of the big platforms needs to have a breakthrough moment. I think that’s going to be interesting to watch next year.”
“I think there’s still a big question mark about livestreaming and how big a business model that can be when artists are back to live touring,” a senior executive says. “It doesn’t mean that live streaming won’t exist — of course it will exist — it’s a very efficient technology, and it’s very efficient for an artist in certain circumstances.”
“I don’t think point to point livestreaming is a real business,” one investor says. “Funding platforms for individual musicians is not a standalone business.”
“The other thing that I think is not going to win the day — and I kind of hope goes away — is business plans in crypto that just want to make their money from fans pockets,” the investor continues. “There are a lot of business plans that go around that are basically just like, how do we take fans’ money? And ultimately, that’s not the right attitude or ethic. In order for people to spend money, you have to earn it. And some of this NFT stuff is, I’m sorry, there’s not much value.”
A Look Forward to 2022: Will the Pace of Innovation Continue?
The question: We have entered a period of accelerated innovation in 2021, what do you expect to come out of 2022?
“I actually expect there to be an even more rabid appetite for innovation,” one senior executive says. “I think we’re going to be inundated with a whole bunch of ideas in 2022, that you’ll see some folks in the music industry really get behind. Many will be wrong, but that’s okay. We’ve got to be wrong in order to get to what’s right. And that’s what’s most exciting for me. A lot of people are really looking to get out of the major label system. Whether it’s companies or smaller labels, JVs, production deal partners, I think folks are really eager to start betting on themselves and they feel way more confident now than they’ve ever used to in the past.”
“Artificial intelligence (AI) assisted creation has found its place now,” an investor says. “Two years ago, people thought of AI as a songwriter — that’s never going to work. But now there’s companies that are thinking about AI as a producer. In other words, it helps people make music sound better, efficiently. And to me, that’s going to result in younger kids making hits — they don’t have to learn all the tech — and then production music being much more suited in real-time to the use-case so that the AI-assisted creation now is woven in the fabric of the creator side of the music economy.”
Another CEO agrees. “I think there could be a breakthrough moment for AI music and it being recognized as not a competitor to music. I think it could be really interesting the impact that has on the further democratization of music creation.”
“I was expecting by the end of 2021, one would have seen live return to its previous state, and it is most certainly not, and COVID is most certainly not over,” another senior executive says. “Live may have to reimagine itself. And that’s where some of these interesting conversations around the metaverse come about. When you think about artist experiences and how they really drive revenue, live has been so crucial, such a large portion of that pie. Something else is going to have to make up — or several other things — are going to have to make up for it, and performances in the metaverse could be one of them.”
“What I would like to see is social streaming,” one CEO says. “I still think there’s a breakthrough moment, whether it’s Resso, whether Spotify really has some sort of secret project where they’re working on some behind the scenes. But I think it’s going to come from a smaller, more nimble company. It is more difficult for larger companies to pivot in that fashion and take bigger risks like that.”
“History has taught us that when you see change happening, typically time accelerates that change and each cycle is shorter,” one senior executive says. “I think 2021 has shown us we’re in an incredibly disruptive time, that COVID has had a really big influence in where the disruption has come from, but I think 2022 we’re going to see the same trends continue. All of those things, I think will continue to lead to an incredibly active 2022 for the industry.”