The Fusion Reactor of Music Industry Revenue

By the end of the ‘Back To The Future’ trilogy, to travel to any point in time, Doc Brown’s DeLorean time machine no longer needed a plutonium power source to generate 1.21 gigawatts of power; instead, the ‘Mr. Fusion Home Energy Reactor’ powered the DeLorean using ordinary household waste. 

Right now, the music industry’s revenue plutonium is a rare combination of massive exposure, music sales, merch sales, touring revenue, publishing royalties, and brand sponsorships.  

Just over the horizon however, the fusion energy of music industry revenue - powered by the convergence of three Internet mega-trends - is about to arrive.

Here are how the three trends will combine to change the revenue landscape for the music industry:

Influencer Search
Imagine all of your numerous areas of interest, combined with your physical location, as a Rubik’s Cube.  Within some of the cubes (the cubes within the bigger cube), you are the king (influencer); within other cubes, you are a mere plebe.  Now imagine tools (influencer search tools) that enable ANYONE to locate the kings of any cube, by size (social reach), and by location (optional).  Influencer search tools are here to stay, and they are evolving rapidly.  Although a leader in this space has yet to emerge, take a look at: Little Bird, Telegance, Klout, or PierIndex.  And, if you want to weigh some of your ‘cubes’, try KnowYourFollowers.

Native Advertising 
Seth Godin said something like this: “advertisers distract users; users ignore advertisers; advertisers distract better; users ignore better”.  Less then 10% of internet users will click on any display ad during the year.  Not only does advertising barely work, the rates advertisers will pay to place ads have been plummeting for years.  What seems to work far better is advertising that is…not advertising.  ‘Native’ advertising is the practice of wrapping a message with engaging content such as a funny YouTube video, a cookbook application, a photo stream, an app, or a whitepaper.  Brands and promoters are rapidly learning that if they want their message consumed and shared, they have to encapsulate it within something that is not advertising and beyond interesting.  One of my favorite native ads is this one from Southern Comfort

Influencer Engagement (Marketing)
If you make a product or sell a service, your wet dream is to have someone popular socially-endorse it in a way that is authentic and deep (versus shallow).  The challenge for a brand is to motivate the influencer to consider the (native) product or service offer, read the instructions, try it (more than once), provide (private) feedback, and then go forward and proclaim genuine love for the brand’s ‘thing’ to his or her legion of friends and followers.  Now where I come from, most influencers are busy people that don’t have time to evaluate every opportunity, product, or service that’s dangled in front of them.  Nope, the only way promoters and marketers are going to obtain (deep) authentic attention from an influencer will be to compensate the influencer for the time it takes to watch the video, read the cookbook, install the app, or read the whitepaper.  Furthermore, if you want a day in the influencer’s social spotlight…well that’s extra ($).  The bottom line: this isn’t advertising: it’s getting paid for your time and attention, combined with paid (or not), transparent, social endorsements (of native ‘stuff’).

= Music Industry Revenue
Influencer Search, Native Advertising, and Influencer Engagement Machinery are coming to ANYONE who wants to promote ANYTHING.  It’s real easy to imagine U2 or Jay-Z getting paid by a national brand to give a new product or service deep, authentic attention prior to socially endorsing the native message or the actual product to millions of fans and followers, but how about lesser-known commodities?  Will a popular regional artist profit from this convergence?  Absolutely. Within local niches, artists are social, style, and trend leaders.  What’s going to be different (from banner advertising for example) is: 1) the capacity for (local) promoters to locate you, 2) to measure your cubes (see above), 3) to engage you (pay you for your time), and 4) to supply you with something native that you can transparently endorse (for a fee or for free) to your valuable niche audience.  Moreover, the promoter retains the possibility of having his or her message go viral.        

The Promotion Side of the Coin
Not only do I see artists benefiting from the revenue-receiving side of the equation I just outlined above, promotion will become a lot simpler when you can easily submit to get your YouTube video or SoundCloud widget featured on HIGHLY targeted websites and blogs; combined with a social endorsement on Twitter, Facebook and Google+.  No more banner ads, and you will be able to reuse (share) the social endorsement as a buy, consume, or share ‘signal’ (as behavior is often influenced by perceptions of popularity within a given reference group).  Moreover I expect you to be able to stack up your endorsements like stairs that will enable you to climb the social exposure pyramid via one prominent endorsement after another.

@brucewarila


For more information, please contact brucewarila @ the email service run by Google.