How to accelerate in music streaming

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Estimated reading time - 17 minutes

Amsterdam Business School (University of Amsterdam)

Guest lecture 9th of October 2019

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Can you briefly introduce yourself?

What do you do?

I am a business and industry hacker. In other words I help individuals and organisations with the digital transformation which can be defined as follows for the creative industry: “The change that a company undergoes, where there is a desire among artists and their managers to create value thanks to the use of the digital ecosystem, where on the basis of set objectives the following goal is achieved, step by step, using analyses (and the subsequent insights): the optimisation of the organisation, the analogue and digital assets.”

How do you as an organisation get a grip on the digital change? How do you measure the change process? How do you create insight into the financial result? I will provide answers to these questions. 

Firstly by zooming in further on the term ‘assets’, so that it is clear that this consists of three elements. Every digital ecosystem contains assets. According to the dictionary assets are: 1.) gift, ability 2.) power, strength; = capacity: ability to adjust, work capacity, perseverance, vision, endurance 3.) (accountancy) the total of the credit items on the balance sheet: own assets minus debts 4.) (in general) wealth, money, possession.

To be able to get started with the digital change, it is important to realise that this change is made up of three fundamental key elements. These are:

• Force: the quantifiable part of the own ecosystem within the digital ecosystem over time;
• Power: the ability to achieve goals and objectives with the own ecosystem;
• Potential: expressing the digital assets of an organisation or company and its own ecosystem in monetary terms.

The application of new technology should lead to more efficient and effective processes, the development of new services and products, revenue growth and a value increase for every organisation. Are you as an artist, dj or organisation able to provide insight into the three key elements (force, power and potential) of assets using your framework, then the change process will be crystal clear for the people in an organisation: there is a clear direction for the change. The typical challenges will disappear like a shadow in the sunshine. I help the creative industry to create their new simplicity!

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How do you help artists and athletes (e.g. Hardwell (Top 10 DJ in the world, Georginio Wijnaldum (football player for Liverpool FC. and the Dutch National Team)? 

Experience has shown that artists, or athletes like Hardwell and Wijnaldum specifically run into the challenges below:

• The ability to retain the current (global) fans and followers, develop the fanbase further and increase the engagement with fans and followers via all digital channels;
• The ability to improve the content which is offered via the digital channels and increase the subscriber base;
• The ability to effectively generate revenue from interaction with the fans and followers via the content that they produce;
• The ability to develop the content in a cost-effective way and serve the digital channels in a profitable and safe manner;
• The ability to attract new sponsors and/or advertisers, retain current sponsors and/or advertisers and to show that their content will create value;
• The ability to identify new business opportunities for the digital channels and to seize them;
• Finally, the ability to compete with other organisations within and outside the sector, and with other media when it concerns the attention of fans and followers.

I create a proper digital strategy which is an integral part of the business strategy. It is essential to see the internet ecosystem as a business ecosystem. This digital strategy makes it possible to create new value models and revenue models from the social networks, in the relationships of all interested parties within the internet ecosystem.

This digital strategy approaches the internet ecosystem as a platform, that is self-sufficient and becomes a source of revenue instead of a cost item, which achieves the set objectives and targets step by step. Within the social networks, content is the glue for this, and information is the fuel to keep the system up and running and monetise the revenue models.

Denis Doeland (Digital Assets)

I use the Business Acceleration Framework which is developed by myself. A way of working that works. A tested method which leads to fast results. Three pillars that you should consider here:

• 5 objectives — When you analyse the performance of websites and social media of organisations, then it appears that they struggle with digitisation. The effort made ‘at the front’ is often there. However, the reward at ‘the back’ is missing. Monetising digital assets and a real digital vision are still missing in many cases. With almost all organisations the context in data is missing. That is a primary component of the digital vision. Management based on the five strategic objectives (value, reputation, efficiency, acceleration and activation) is the solution for this.
• 9 steps — Organisations want more insight into the progress of processes and results. The framework allows them to get control over the organisation and to get everyone working towards the five (predefined) objectives. These objectives are needed to get the operating capital (the analogue and digital assets) to grow. This capital is: the relationship with the (potential) fan or client. Implement the nine steps which lead to a successful digital transformation and which allow an organisation to accelerate in the digital world.
• 12 analyses — Organisations create relationships with (potential) fans or clients by satiating their need for content and providing more relevant answers and content quicker and quicker. However, organisations cannot just get started with the framework and the plan. Before they can keep up with the speed of the digital world and can accelerate with regards to their competition, the 12 analyses first need to be completed. The zero point of the framework and the plan for the digitisation must first be created. The image of the digital transformation on a timeline and containing the milestones for the five objectives comes from this.

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Which business organizations and/or professionals play an important role in the success of DJs?

The DJ’s management and its first-line partners (record companies, music publishers, booking agencies and the like) must co-operate on equal terms, realizing goals by exploring options in close collaboration. They all play a significant role in the success of an artist, a dj. The question should not be: who plays a significant role? But: how could they play a significant role in the succes of DJs?

All organisations and proffesionals should re-organise themselves and work together. Co-operation, complementing competitions, trust and shared ambitions are fundamental characteristics of the new organizational form. The people that comprise the network organization work independently, and are facilitated rather than managed. The very same applies to the event or festival producer. The organization and its various in-house modules and outside partners (creation, production, communication, sales, legal and bookings) must work as equals towards a common end. The formation of a steering group is imperative, an ‘organic’ consequence of the process.

DJs and event producers are compelled to reinvent their business model in order to become part of the internet ecosystem. The traditionally organized company with its hierarchical structure is not in sync with the digital reality. The market develops its own dynamic; it is hardly impossible to identify how things came about.

A success factor of the new business model for DJs and event producers working in the dance industry is the restructuring of their organization. The organization must be designed in the form of a collaboration, a so-called network organization, an often informal collection of co-operating modules that signals practices, developments and current plus future bottlenecks regarding awareness, knowledge, policy, implementation and regulations; arranges who tackles these issues and how; and communicates these matters to all parties concerned.

A network organization must be regarded as a an organizational format in which members of organizations (so-called nodes in the network) collaborate to realize both common and individual targets, goals or objectives.

What are the common revenue streams of top 50 DJ Mag DJs split in different types?

There’s no particular division of the different type of revenue streams. That is depending on the business choices an artist, an organisation or its management takes. I strongly advise to look at the following insights based on global surveys, for example of the IFPI: 

• Streaming music is hugely popular globally: 89% listen to music through on-demand streaming;
• There is a surge when it comes to older age groups using music streaming services: the highest rate of growth for use of streaming services is in the 35-64 age group. 54% of 35-64s used a music streaming service in the past month (+8% from 2018);
• Time spent listening to music each week is up – 18 hours. That’s more than the 17.8 hour average in 2018 and more than 2.6 hours daily – the equivalent of listening to 52 three minute tracks.

According the IFPI report streaming revenue grew by 34% and accounted for almost half of global revenue, driven by a 33% increase in paid subscription streaming. There were 255 million users of paid streaming services at the end of 2018 accounting for 37% of total recorded music revenue. Growth in streaming more than offset a 10% decline in physical revenue and a 21% decline in download revenue.

Record company-driven investment, innovation and partnerships are supporting artists to connect with fans around the world whilst also yielding dynamic growth in high-potential markets. For the fourth consecutive year, Latin America was the fastest-growing region (+17%) with Brazil (+15%) and Mexico (+15%) growing strongly. The Asia and Australasia region (+12%) grew to become the second-largest region for combined physical and digital revenue, with especially strong growth in South Korea (+18%).

For me it’s clear. Focus on streaming! From streaming the other revenue streams like performances, merchandising and sponsoring/endorsement can be rolled out. Based on the aforementioned macro-movements we take the decisions which territory comes first and which channel. My adage: music leads to streaming, which leads to performances, which leads to merchandising and sponsoring. In this order primary and secondary revenue streams.

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What does the product life cycle in Electronic Dance music look like?

Product life cycle of a track? Product life cycle of an album? Product life cycle of compilations?

The product life cycle for a track, an album or a compilation are similar. Therefor I use the innovation theory, as described in the Diffusion of Innovations book, is a theory that comments on the spread of an innovation, a new product or idea within a group. The original theory was conceived by Frenchman Gabriel Tarde, but made popular by Everett Rogers. The theory is well known specifically in the marketing world, where the description of the life cycle is central. Rogers distinguishes various stages, in which different groups are identified which accept a product. The theory is visually translated in a bell graph.

Rogers presents a subdivision, in which he points out innovators, early adopters, early majority, late majority and laggards. Music fans which are named as innovators buy newly launched products, and early adopters are the followers of the innovators.

On the basis of his theory it can be assumed that about 3% of the total target group displays innovative behaviour (innovators). The segment of the early adopters is estimated at 13% of the target group. The communication transfer of the innovators to the early adopters is critical for the success of a product in the future, also called chasm.

In communication to the market, innovators can be used as a means to stimulate the growth of a product. This application is called testimonial. The majority of the target group covers 68% (early and late majority). The remaining 16% of the target group is called laggards, those that lag behind.

To what extent are the aforementioned release strategies of tracks, albums and compilations related?

They are for me related as followed. I always strongly advise to release music in whatever format in these four phases. On the basis of the abovementioned percentages the life cycle of a product can be broken down into four phases:

• The introduction phase: the launch of the new product on the market requires attention from the management for the quality of the product (banishing start-up problems) and communicating about the product with the innovators.
• The explosive growth phase: establishing the product in the market now requires strong communication with the early adopters (testimonial) and the quantitative distribution (available everywhere).
• The ceiling phase: the majority buys the product, the distribution is qualitatively regulated and the price policy starts to become important to assist advancing its penetration.
• The maturity phase: the laggards and the loyalists are the only ones who still buy the product. Marginal improvements to the product, together with price changes, keep the product in the air as long as possible. Until the moment where there is a loss, a product provides cash flow, where new products can be financed.

Can you describe the release strategy of tracks and albums in Electronic Dance music?

Do they use different release windows (as we still see in the film industry) or do they use a simultaneous release strategy and why is that the case?

I always advise my clients such as Hardwell, or his label Revealed, but also other clients the following. 

A good content strategy helps. A good strategy can allow you to create and curate content which is relevant for the target audience at the right time. This leads to strong relationships with fans. With good relevant content you distinguish yourself from your competition who do not follow a strategy. In addition, such a strategy helps to discover who at which moment, requires what content to achieve your aim. 

Furthermore it also helps to discover what the best form and best method of offering this content is. Connecting the strategy to the aim of your organisation and measuring the final result, helps you to make clear what the added value of content is for your fans. The aim is to connect, and content is the method of connecting. By sharing the content consistently, and maintaining that in a disciplined way, you will see that you connect with increasingly more fans and get on the right path to win the trust of your fans. Result: the curve of the digital life cycle is rising and the ceiling is not yet in sight.

Besides the activities of the DJs themselves, which, media channels, persons, websites, blogs, organizations and other platforms are most important in making a release successful?

Each DJ – and every event and festival as well – is actually a brand, that is, a platform. What to do in order to realize striking online presence and ditto value? For the DJ operating in the digital world, proper branding entails:

• The DJ’s website must be detached from the record company’s website; it serves as a central hub for all information and content;
• The DJ’s website must include ordinary e-commerce facilities, for example a basic web shop offering music, merchandise, downloads and tickets for sale;
• The DJ’s website, social channels, apps and additional platforms must be interconnected;
• Pre-orders and pre-saves are the key to maximizing digital turnover. All digital and/or physical albums and singles must be available as pre-order or pre-save items;
• The distribution of single and album releases via all relevant online retail channels must have global coverage, but key territories first;
• Leaking WAVs, MP3s and mixes (DJ sets) to bloggers, podcasters, DJs, radio and journalists;
• A digital PR team that contacts internet radio, podcasters, bloggers, journalists and DJs and compiles online promotion packages;
• Images of all MP3 and mix releases. These are present in the search engine directories of Google, Yahoo, Bing and DuckDuckGo in order to generate traffic;
• Photos and/or videos of performances and concerts; documentaries on the DJ and his (her) career; clips of tours; and interactive web activity must be used to engage (the relationship with) the fan;
• Provide mobile convenience. Create a mobile app (for all operating systems: iOS, Android, Windows and BlackBerry) that is frequently updated, or remodel the website and make it ‘responsive’, i.e. indiscriminate functionality for laptop, tablet and mobile phone;
• Open accounts on Facebook, Twitter and YouTube to bolster fan engagement. Consider accounts on more recent channels such as Pinterest and Vimeo;
• Customized banners on various social networks that link to the DJ’s website;
• Publish an Electronic Press Kit (EPK) with biography, photos and videos (for example, MP3s, clips, mini documentary, release information of the complete discography, buy-button, info on airplay, performing highlights, upcoming events, potential audiences), that include links to the DJ’s primary channels (website, Facebook, Twitter, iTunes, Spotify) and the correct contact information;
• Create a fan base. Publish a ‘sign on’ field or include a ‘sign on’ button – for example, for a newsletter – and invite fans and visitors to subscribe;
• Use the email list for frequent mail outs; the mail out service is equipped with an ‘autoresponder’;
• An event calendar is included on the DJ’s website; it can be copy-pasted by third parties;
• Information on collaborations vis-à-vis strategic partnerships and sponsoring for cross-promotion releases and fan recruitment;
• 24/7 digital radio dedicated to priority releases. It should be available to the website of the record company, the DJ, high traffic internet radio directories, plus music channels of cable and satellite services. This radio station is the DJ’s official radio station.

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How important is Spotify in Electronic Dance?

From a unique panel data set of music consumption on access-, and ownership-based platforms, a colleague of mine Hannes Datta and his team demonstrated in 2015 the short-, medium-, and long-term effects of adoption of online streaming on quantity, variety in consumption, and new music discovery. The study showed that Spotify increases total consumption, leads to more variety, and facilitates discovery of more highly valued music. At that time it was clear for me what the importance was of Spotify. It plays a significant role in the music landscape.

There are about 110 million search results on the search phrase spotify dance music and about 20 million results on the phrase spotify electronic dance music. These numbers show the importance on Google of Spotify and EDM or music lovers and fans which are interested in Dance music.

Spotify market value has reached 28 billion following float in April 2018. Electronic music is a significant contributor to Spotify’s success. Mint Electronic playlist is sixth most popular on Spotify in 2018 with over 5 million followers and 126 thousand estimated listeners now. Third and fourth most streamed tracks on Spotify are Dance and Electronic. MIDiA Research estimates 27 out of 100 All Time Most Streamed tracks are EDM, Electronic and House. The Chainsmokers are only the third act to achieve over 1 billion streams for more than one single on Spotify in 2018.

Are there specific success strategies for Spotify marketing (i.e. how do you play the playlist game)?

How do you select specific Spotify playlists for new releases? How important are personal relationships with Spotify playlist curators? Where can/do artists, labels and managers meet these Spotify playlist curators? How important is the timing of the release on Spotify?

Mint is the lead electronic music playlist in Spotify’s ecosystem, and is the result of the August 2017 re-branding of its electroNOW playlist. It is the EDM flagship in the pantheon of Spotify sub-brands that are now using vertical mobile-optimized videos, exclusive artist content, and radio-bred curators to leverage Spotify’s current streaming dominance (35% of the streaming subscriber market share) into other lines of business such as live touring.

Under the watch of Global Head of Dance & Electronic Music Austin Kramer, mint exhibits several unique traits among the Spotify’s biggest playlists (Today’s Top Hits is currently #1). This is your number 1 contact in your contacts of your phone. He has to be on speed dial. This is the person you need to build a relationship with.

But how further? Artists, CEOs, managers … you name it. They are at industry conferences like Amsterdam Dance Event, IMS, Sonar and some others. Being in one place at the same time with a ton of other industry people? You have to network with others. Make an effort. Even if it’s expensive. It pays off. Pro-tip: contact people before the conference actually begins and set up some meetings. Go to club nights and talk to promoters and artists. Head to workshops and seminars. Any event where other industry people or artists are located. Clubs and parties work well as people have their guard down.

And finally use Linkedin. All relevant industry players have a Linkedin profile.

Are top DJs (such as Hardwell) communicating via social media on their own initiative or does their management do this?

There is no holy grail in this. Determine how often (rhythm) you want to publish content (consistency) and maintain this (discipline). This is the real challenge: the combination of rhythm, consistency and discipline is often underestimated. If you take on this challenge — and succeed — you can ensure that content contributes to the growth of your business, ensures that your save costs and even creates new revenue streams. If you are not able to develop a valuable digital relationship with your audience using relevant content, there is a great chance that you will lose out to your competitors. This is what we taught Hardwell and his management. In Hardwell’s case during his period of absence we created based on these insights ‘The Story of Hardwell’.

We are using for Hardwell the Content Impact Model, because it forms the basis for the development of the Content Impact Strategy. Here it is very clear which content is relevant for your audience and via which channels you can best distribute the content. Here it is important to bear in mind the ‘fan journey’ of your audience. With this I mean the various phases that someone goes through from the moment they do not know you yet, right through to the moment that they become a fan or ambassador of your company.

The phases of the fan journey are: awareness, create interest, consideration, decision, buying and experience. Each of these phases needs other content and different channels are used. For example, if you visit a festival (and are in the ‘experience’ phase), then it makes sense that in this phase you are willing to leave a review or share your own experiences via social media. You also show different search behaviour than someone who is still in the orientation stage. If you visited the festival in 2017 and had a fantastic time, the chance is great that you will return in 2018 — and will therefore look for the date of the same event in 2018. Someone who has not yet attended the party, will search for more and other information about the festival.

The daily translation of your content ambitions (the Content Impact Model) and the reality (your digital heartbeat) is the succes factor. In the case of Hardwell’s absence this lead to 50% more turn over on streaming (which is over 90% of his music income) in the first six months of 2019 compared to the same period in 2018. This is four times the growth of Spotify in the same period. The turn over is mainly generated with songs (83%) released before 2017. This proves the theory of Rogers. The songs in the maturity phase are the driver for Hardwell’s existence.

Denis Doeland – Digital Assets

When you Google “Content Impact Model Denis Doeland” you will find a brief example of the fan journey, elaborated as part of the Content Impact Model. A model developed by my collegae Michiel Schoonhoven of NXTLI. This features the time (the step in the purchasing process) and the process (what do I do with which content) in a diagram in a clear way. You also see a diagram stating which form of content must be posted per week. As you see, more information flows become relevant when more time has passed.

All of Hardwell’s revenue streams have a sales curve. It makes no sense to encourage people to purchase a ticket (or product) in week four (during the orientation phase), because they are still in the orientation process. The Content Impact Model is also a good indication of your sales curve, which helps you to make better use of marketing budgets.

When you have developed a Content Impact Strategy, you can commence with the Content Impact Roadmap. That is the translation of the strategy to the implementation in a diagram in which you can see when you post which type of content on which channel. Here you can also see which content is relevant to publish. Consider here: news items, columns, photos, videos, music (demos and releases), podcasts and streaming (relevancy). This is the daily translation of your content ambitions (the Content Impact Model) and the reality (your digital heartbeat).

In the case of Hardwell’s absence this lead to 50% more turn over on streaming (which is over 90% of his music income) in the first six months of 2019 compared to the same period in 2018. This is four times the growth of Spotify in the same period. The turn over is mainly (83%) generated with songs released before 2017. This proves the theory of Rogers. The songs in the maturity phase are the driver for Hardwell’s existence.

How are online and offline marketing integrated (or related)?

Online and offline are completely related and integrated with each other. Organisations are forced to rediscover their business model and become part of the internet ecosystem. A traditional, hierarchically organised company no longer fits this development. Currently, the market has its own dynamic, where it is almost impossible to identify how a business model has come about.

The success factor of your new business model is the redesign of your organisation. Your organisation must be set up as a partnership; a so-called network organisation, which often operates in an informal manner. It also signals the current and future bottlenecks in the areas of policy, awareness and legislation, among other things.

A network organisation must be seen as an organisational form where mutual members of organisations (so-called nodes within the network) collaborate, to reach the greater objective, both on a joint and individual level. Set up the organisation as a partnership and learn from each other. Use each other’s strengths is the motto.

What are the most important trends in Electronic Dance music and what kind of challenges and opportunities will this create for DJs and their management?

Decisions in the area of social media management, PR, communication, marketing and sales are (in the dance industry) often still made on the basis of limited insights. The context is often missing in the communication between artist and fans. You therefore see many service providers, such as PR agencies, social media management agencies, sponsor acquisition staff and storytellers, often fail. Why? Simply because they do not know which context exists within the relationship between artist and fan. The context exists only when information from internal and external channels are connected to each other. This theory is also supported by Hardwell’s digital director and dj Sam Feldt, who expose this context with their own content platform.

The dance industry has many contextual challenges. Nowadays, a fragile list that lacks transparency such as the DJ Mag Top 100 is the guide for many event promotors worldwide to decide which DJ they wish to programme at their events and festivals. Such decisions are made without any context in this list. That is a dangerous development. Especially because there is other data available, which provides other insights. For now, it seems that the dance industry just stares blindly at the incorrect information.

>>> Are you lookin for more insights? Check also Digital Assets the publication of Denis Doeland

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