14 MINS READ
More power to independent artists
Music industry icons from Elvis Presley, Madonna to Lady Gaga have made millions and built a massive following by working with major record labels.
However, digital technologies and an emerging generation of artists are transforming how music is made, distributed, and consumed. While globally, recorded music grew by 7% in 2020 to reach $23.1 billion, it was significantly below the 11% increase seen in 2019. On the other hand, independent artists grew faster in 2020 by 34.1%, ending the year on $1.2 billion and increasing the market share to 5.1%.
Driven by new production tools and services in a ‘creator economy,' artists can today build a successful mainstream music career without the backing of a record label. They can release their music and engage with fans directly through digital music distribution, streaming platforms, social media, and online marketing tools.
Does this mean that musicians don’t need record labels anymore? The answer lies in how these companies are willing to leverage digital technologies to attract and retain artists. Data-driven insights from artificial intelligence (AI) are one of the ways record labels can provide more value to both the artists and the audience while adding to the topline. Let us see how digital twin technology can be used to create virtual replicas of critical entities in the recording business ecosystem. The twins provide insights needed to develop hyper-personalized strategies for building and improving artist relationships.
Changing tracks: Making music in the era of the artist
However, how music is made and shared with the audience has undergone a cultural shift. Social media platforms such as YouTube, Instagram, and TikTok have shifted the power of engagement into the hands of the artist—many have gone on to achieve global popularity.
Brandwatch’s ranking of influencers on Twitter in 2021 reveals that musicians represent the most influential profession on the platform for the second year in a row, with 54% of ranked influencers falling in this category. It is not surprising that artists question if they need to be bound by contractual restrictions. With the democratization of music creation, many new musicians decide to go independent or collaborate with smaller indie labels. While this strategy may offer financial and creative freedom, artists should remember that navigating the music business is a complex task, riddled with uncertainty.
Moreover, the digital music landscape is highly competitive and saturated. By collaborating with the correct record label, artists get the support of an entire team to execute their larger vision. The question is: are record labels providing enough value to make the artists stay?
The need for harmony in the artist-record label relationship
Harmony is the sound of two or more notes heard simultaneously—it is all about synchronizing crucial elements such as timing, tempo, and pitch. At the same time, each singer can still retain their individuality. It is the sweet spot for artists and record labels—understanding the symbiotic nature of their relationship.
There are several demands for a successful music career, some of them include dedicated time, resources, budget, and connections. For artists, having the support of a record label for distribution, marketing, merchandizing, and touring can significantly increase their reach and popularity. By having years of experience in the music business, record labels connect with promoters, booking agents, media, and venues.
While artists can figure out how all this works, it can be expensive and time-consuming and cuts into their core focus area—making music. In addition, being independent may give artists creative control concerning their artistry and music style, but it can be a long road to success and cost more upfront. More importantly, like any other business, music requires a deep understanding of the end consumer and what kind of product or service creates the most impact. Record labels today still have a better view of the micro and macro trends in the music industry. The artist and repertoire (A and R) department manage an artist’s growth beyond an album or record. The onus is on record labels to prove that they can provide real value beyond financial support. It will mean leveraging insights across the ecosystem to offer the right combination of services that maximize the future potential of the artist.
Creating value for artists using AI
According to a McKinsey report, 70% of companies will have adopted at least one AI technology by 2030.4 AI-driven insights are the answer to harmonizing the relationship between artists, record labels, and the audience. By backing the gut instinct with a data-driven A and R, AI and machine learning will be vital in making better choices, driving innovation, and transforming the creative process. Some leading labels have appreciated the need for AI adoption. For example, Warner Music Group acquired the tech startup Sodatone to leverage its proprietary A and R insight tool, which combines streaming, social, and touring data with machine learning to predict which unsigned artist has the best chance at success.
Augmenting the power of AI using digital twins and simulation technologies
AI-based digital twin technology would help record labels create virtual replicas of crucial entities in the business, including artists, the audience, distribution partners, and digital distribution channels such as Spotify, merchlines, promotional campaigns, etc. These digital twins incorporate explicit characteristics such as age and language and implicit attributes such as behavioral traits, loyalty, and human sentiments and affinities. The twins are then launched in a virtual environment that appreciates externalities such as environmental influences, eg, COVID-19. Or context brought by technological advancement, eg, Metaverse. This environment is then used as a virtual playground to experiment with various business decisions and predict and influence how the twinned entities of interest would respond.
With digital twins augmented by simulation technology, record labels can simulate various ideas in the virtual environment consisting of the converged digital twins.
For example, the A and R managers can simulate the launch of a new artist, or a marketing manager can affect a change in budget across promotion channels.
Simulating the entire artist lifecycle, experimenting with various decisions such as launching a new album or a regional tour, and evaluating the outcomes of such decisions in a virtual environment minimizes ambiguity and risk. It would enable the A and R teams to create hyper-personalized strategies to onboard and maintain new and existing talent, respectively. It will also help optimize record releases and predict what results in greater returns for both the record labels and the artists. Record labels can also nurture lucrative relationships with various partners such as publishers, distributors, event planners, and merchandise manufacturers, using predictions that support better partner choices.
They can also drive partners to perform better with effective incentives (based on insights from ‘partner digital twins’). It improves revenues and artist, audience, and product lifetime values.
‘What-if’ simulation outcomes reflect the impact of business ideas on key performance indicators (KPIs) such as cost-per-listener, social buzz, and revenues at various points in the planning process. Such insights determine the label and the artist's exact path to future success. Conversely, KPIs can be calibrated on the simulation console to receive recommendations on the best route to achieve specific goals with' If-what' simulations. These recommendations can be further compared and ranked based on relevant KPIs.
Archetypes of twinned entities: A tool for effective decision-making
For example, digital twins of the audience may give rise to ‘the recently heartbroken’ archetype based on various factors such as their choice of music genre or ‘morning drivers’ based on their content consumption patterns. Archetypes can also emerge from digital twins of artists, eg, the ‘genre-loyal’ archetype of artists who create music of a typical style or origin, such as Korean-pop or ‘fan-fam’ for closely connected artists to their fans, like Beyonce with her ‘beehive’ community.
Once created, the twins and archetypes can interplay within the context of their environments, highlighting exciting linkages. For example, consider the impact of a tweet from the artist on record sales, radio airtime, audience reception of a tour, merchandizing inventories and so on.
Hitting the right notes in artist management
It continues to evolve with the rise of digital and streaming services. Record labels need to rethink their roles to stay relevant to artists and the audience, especially with tech startups looking to disrupt the traditional value chain. With the support of AI, record labels can be the perfect launchpad in addition to providing value-added services which promote and scale artists’ careers.