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presents....
A Newsletter about Big Ideas in Music and Technology, by Cherie Hu
This is issue #61, published on August 25, 2019
Happy Monday!

Yes, I know it's not a Thursday... This newsletter installment is coming a few days late because I'm writing this from Mumbai!

I've been spending the past few days touring around the city, eating lots of delicious snacks and getting over jet lag. Tomorrow (August 27), I'll be moderating a panel at the All About Music conference about the current state of "non-film" music in India, i.e. music that isn't affiliated with the gargantuan industries of Bollywood (Hindi-language), Kollywood (Tamil) and Tollywood (Telugu).

I've been compiling as much research as I can in the meantime about non-film music, at both the major and independent levels. If you have any thoughts or resources to share on that topic in the meantime, please let me know by replying to this email!

I'm also sharing some music-related observations during my time here on my Patreon page; you can read the latest such update by scrolling down to the "My writing elsewhere" section at the bottom of this newsletter.

Now, onto today's essay — thank you for your patience!!

- Cherie :)
Music and livestreaming: The major myths and realities of success

The lowdown:
- There’s more hype than ever around the future of livestreaming in music, particularly in relation to gamer culture.
- But incumbent music companies still struggle with influencer economics.
- Meanwhile, wider myths about livestreaming’s impact on the long tail of artists, and about what viewers are looking for, blur the music industry’s vision in terms of what it really takes to succeed.


You may have noticed that every major label now has an esports partnership or subsidiary — a fact that was not true even one year ago.

Sony Music’s Lost Rings and Universal Music’s Enter Records imprints draw a direct line between esports and A&R, signing artists who have an organic relationship with online gaming communities. Universal and Warner Music have also inked curation- and content-driven partnerships with Ninja and the League of Legends European Championship (LEC), respectively.

Even gaming platforms themselves are now bending in labels’ favor. The winner of the new singing competition Twitch Sings: Stream Star, hosted on the eponymous, Twitch-owned karaoke platform, wins a single deal with Sony Music’s Columbia Records. In this vein, Twitch is deliberately positioning itself as an A&R funnel; it’s basically like American Idol and TikTok rolled into one. (Sorry.)

But let’s zoom out a bit: The hype around gaming is really just hype around livestreaming, which is really just hype around an emerging, industry-agnostic model of community development.

Back in 2015, I wrote a piece for Forbes that tried to articulate this new community model as a kind of “microcosmic.” “With livestreaming proving its profitability around smaller audiences and shorter time frames, the new concert world is, in some ways, shrinking,” I wrote. “Rather than expanding concerts’ reach, what [companies like] Stageit and Huzza are doing are creating microcosms of the conventional live concert space, fostering a supportive environment thriving on micro-broadcasts and micro-transactions.”

Revisiting that article nearly four years later, I now see one problem with my initial characterization. With the exception of a select few artists I can count on one hand, music livestreaming for smaller audiences has not yet proven its profitability. Some of the platforms I mentioned in my original article are no longer around. And for all the buzz around Twitch and esports, the number of “Twitch-native” artists who are making a full-time living from livestreaming income is also negligible.

For this newsletter, I decided to dig into a combination of academic research and industry interviews to figure out why there is still a gap between the media hype around livestreaming and actual industry practices on the ground. Along the way, I came across some themes that challenge conventional notions of the “long tail,” release “consistency” and other common, perhaps hazy ideas in the music business.

The music industry is the influencer industry — but labels aren’t built to market influencers

At least in the more interactive context of Twitch and gaming, livestreaming economics is a subset of influencer economics. Streamers make their money directly from highly-engaged fans, most commonly through micropayments and artist/channel subscriptions. These mechanisms monetize audiences and attention, rather than exploiting any kind of intellectual property.

In contrast, record labels — which are not the only kind of music company, but are among the most aggressive such companies to invest in gaming and livestreaming — still prioritize songs over artists. With the ongoing dominance of audio streaming services like Spotify and Apple Music, consumers are trained to value music by paying for a third-party rental service, rather than by engaging with and supporting a specific artist directly. Visuals are relegated simply to being promotional vehicles of secondary importance to audio.

Hence, despite the fact that musicians are undeniably some of the world’s biggest influencers, the wider music industry struggles to mesh well with influencer economics because the financial incentives don’t always match up.

The musicians who do succeed in the influencer realm usually exist outside the major-label ecosystem, and lead vastly different careers from what tends to be covered in trade publications. As I wrote on Patreon, these influencer-leaning artists publish videos at a much higher cadence — in part because they’re also posting beauty tutorials, dance rehearsals, comedic skits and other types of content in addition to music. This puts them at an advantage with respect to discovery and getting picked up by recommendation algorithms, while also training followers over time to visit their channels regularly for updates.

Perhaps because of this gap, major labels traditionally outsource influencer-marketing expertise to smaller agencies like Influencia, Muuser, Speakr and Fanbytes. But this approach may no longer be viable in a gaming and livestreaming context — especially for gaming-driven labels like Lost Rings and Enter Records that are expected to leverage their own influencer expertise in-house for their roster.

Myth #1: Livestreaming skews consumption in favor of the long tail.

There’s a widespread perception that livestreaming platforms will be a crucial driver of music’s future democratization. Hypothetically, just as anyone can upload a video to YouTube, anyone can start livestreaming from their phone and engaging with fans and strangers as “micro-influencers.”

But that doesn’t mean more attention or money is actually going to the long tail. In fact, the skew in livestreaming makes the long tail even thinner than before.

A 2015 academic paper titled “An Analysis of the YouNow Live Streaming Platform” found that 80% of views on YouNow came from just 10% of broadcasters, while 5% of broadcasters generated no views at all. Another study that same year found that 70% of views on Twitch came from just 0.5% of broadcasters. That’s even worse than the overall live music sector, in which the top 1% of performers claims 60% of touring revenue, according to the late Alan Krueger.

Hence, more than democratizing creativity, these livestreaming platforms excel at amplifying already-popular personalities. In fact, mini-celebrities are so important for their business that they’re now being poached from one platform to another.

In addition, conversion rates from followers to viewers — the analog to “followers to monthly listeners” in audio streaming — remain paltry for artists of all sizes. “If you have 10,000 Instagram followers and decent to good engagement there, it might mean 10 people will come to your livestream,” Karen Allen, longtime music-industry consultant and author of the new book and online course Twitch for Musicians, tells me.

Even the biggest streamers struggle with this as well. Before Ninja ditched Twitch to join Mixer, he had over 14 million followers on the former, but an average of around 40,000 viewers a week — a conversion rate of less than 0.3%.

In short, at least under the current model, supposedly “democratic” livestreaming platforms actually keep the superstar effect high, and the follower-to-viewer conversion rate low.

Myth #2: Concerts are the only future of livestreaming.

Of course, virtual concerts like the Marshmello/Fortnite show will be a significant part of the music-livestreaming ecosystem, as they have been for years. But it certainly cannot and will not be the only use case, let alone the most dominant one.

In my opinion, the one-directional, mass-market livestreaming model — think annual Coachella livestreams, or live webcasts from symphony orchestras — is unsustainable as a standalone business, even if it remains popular with incumbent music companies.

Even though they might increase a given concert’s accessibility to a wider audience, they’re expensive to build and run onsite, particularly for an individual, independent artist. Truly high-quality, low-latency streams require entire teams of producers and engineers, not to mention a strong-enough internet signal to make the viewer experience smooth. Plus, fans usually don’t want to pay for these kinds of streams, adding sponsorships to the logistical burden.

I don’t see any correlation between live concert broadcasts and livestreaming on Twitch,” says Allen. “If anything, livestreaming has succeeded in spite of it.” In fact, in her book Twitch for Musicians, Allen refers to Coachella-style live videos as “broadcasts” instead of streams, since they involve little to no audience interactivity.

The future of livestreaming is less about concerts, and more about the artist playing a direct role in facilitating a community that would not otherwise exist. “If you are not willing to interact with your audience, you may as well just post videos to YouTube,” says Allen. “There is no difference in experience for fans between watching it live and watching a linear stream of a pre-recorded show or even a VOD, so there’s no incentive to pay.” These are many of the same reasons why livestreamed concerts comprise a mostly failed business case for virtual reality.

Myth #3: There’s a set formula for how long, and how often, music livestreams need to be.

Consistency does matter to succeed in livestreaming — more on that later — but beyond that, there’s really no proven formula yet, which works in the artist’s favor.

Importantly, the typical length of a given stream varies widely from one platform to the next. According to the aforementioned YouNow paper, the median length of a broadcast session on YouNow is only around 16 minutes. In contrast, 30% of sessions on Twitch last more than four hours — likely because of deeper ties to gaming from home, as opposed to broadcasting on the go.

I think this gives artists more choice than is often communicated to the public, in terms of seeing which platforms fit their creative preferences. There are a handful of new platforms and initiatives coming up that are friendlier to artists who are newer to the livestreaming circuit, such as Encour and Allen’s InRotation channel on Twitch.

In addition, artists do not have to stream every day; they can schedule their streams differently depending on whether they want to turn existing fans into superfans, or gain new fans by tapping into existing stream communities.

If you have a lot going on and can only stream once a week, you’ll mostly be playing to your existing fan base — that’s fine,” says Allen. “The Fantastic Plastics have been doing this and they have turned regular fans into superfans this way. Moonlight Social went the other way – they did not bring their fan base on Twitch and have organically grown a following on Twitch by playing once or twice a week that they’ve managed to migrate to their email list and socials and Spotify. Marina V specifically started Twitch because she got pregnant and didn’t want to tour in 2019, so she’s brought her fan base on Twitch and monetizes them every week.”

Myth #4: As a platform, you can build a business on top of one-and-done livestreams from artists.

To revisit my 2015 Forbes piece, I think the problem with many of the platforms I mentioned is that most of their featured artists gave just one-and-done, novelty-driven performances, without demonstrating any actual long-term engagement. This led to a naturally high churn rate, as artists simply returned back to incumbent engagement models (read: Instagram, Snapchat, etc.), and hence there was a failure to create an entirely new class of creators and behaviors.

Just as artists won’t succeed in livestreaming without a consistent schedule, so won’t the platforms themselves succeed without active users (namely artists) consistently coming back to them. In this sense, livestreaming is not that far off from building your own, miniature social network.

One final thought on this point: in the audio streaming era, labels love throwing around the word “consistency” ad nauseum, as if it’s the industry’s saving grace. One of the most extreme examples of this mindset is Universal-owned Quality Control Music’s “Control the 4th Quarter” strategy, in which the label tries to put out as many records as possible in the final quarter of the year; in December 2018, they put out four different records alone. As QC co-founder Pierre “Pee” Thomas told Complex: “You've got major labels that haven’t put out as much product that we are doing in the fourth quarter in a whole year.”

In such cases, flooding the market does have a direct line to revenue. But in the livestreaming world, flooding the market as a cash-grab tactic will almost certainly alienate and push away both potential and existing fans.

Come to [live]streaming with the intention of sharing your music, meeting people, and making money, in that order,” says Allen. “If you are there only to make money, your greed will show.”

Given the extremely skewed consumption patterns on livestreaming platforms, consistency will definitely help strengthen your community, but it likely won’t give you that much more market share compared to your peers. And artists and labels of all sizes have to be OK with that. Otherwise, in the words of Christopher Thiessen, they’ll just end up looking like “a color-by-numbers drawing.” 🌊

Thanks to Yash Bagal for providing research assistance on this piece!

✨ If you’d like to support even more thoughts and conversations on music and tech, I encourage you to become a paying member of the Water & Music ecosystem on Patreon. For as little as $1/month or as much as $40+/month, you can access a wide range of perks including:
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…and much more! Thanks so much for reading! ✨
My writing elsewhere

I wrote two new pieces on my Patreon page:

Streaming isn't “direct-to-fan”: The problem with Spotify's new Stories for Playlists feature. I lay out four main reasons why the reported Stories for Playlists — first spotted by software developer Jane Wong — fundamentally misalign with Spotify’s core product, which lacks meaningful social and direct-to-fan mechanisms.

Four initial observations on India's music industry. Based on my first few days in Mumbai, I wrote some quick notes and observations about how the local music industry operates, and what the key similarities and differences are from Western markets — from recommendations, to streaming services as A&R.

What I’m listening to

I finally watched Gully Boy this weekend! It’s an excellent Bollywood film inspired by the lives of Indian rappers Divine and Naezy, and has changed the conversation that music-industry folks are having here about the future of Bollywood and local independent music at large. Divine was also recently announced as the first signee to Mass Appeal India, a joint venture between Nas’ Mass Appeal and Universal Music India.

I finally got to listen to Cuco's latest album Para Mi, and it’s chock-full of heavy-reverb, psychedelic goodness. A perfect listen for winding down at any time of day. “Feelings” is by far my favorite track.

Epilogue

Kyle Chayka, a writer I admire, wrote a great post for his own newsletter about the past and future of curation, and why we’re heavily devaluing it as a modern society.

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