News June 10th 2015

Midem: Music Industry reshuffle and business disruption

Midem Ekimetrics Vivendi  Industry reshuffle and business disruption
During the Midem 2015 we made several Key Notes for Vivendi to understand the shift of the music industry from product to service. We also presented a comprehensive customer journey of three different generations: Boomers, Y Generation and Digital Natives.

On June 5, at the opening of MIDEM in Cannes at the Palais des Festivals, Ekimetrics and TheMediaShaker, represented by Marie Sellier, gave the audience a comprehensive chronology tracing the evolution of the music industry.

Ekimetrics Vivendi Music Industry Chronology Disruption Product to Service

The pre-Internet era was definitely the “Golden Age” for innovation in hardware, physical formats, from Radio to Vinyl, from Cassettes to CDs. The typical music consumer would “buy” an album and pay for each purchased unit. Then came the year 2000, during which a real industry shift from product to service took place, exemplified with the arrival of Napster and Pandora.

The figures do speak for themselves: in 1995, only 0.6% of the world population had access to the internet. Now almost 40% of the world population is connected. This easy and widespread access has in turn facilitated illegal downloading. At the same time, connectivity has enabled the emergence of many legal services such as iTunes and later on, social media platforms.

Today’s consumers are looking for more than just a song. They are looking for an entertainment experience; they are looking for interaction, which implies finding ways to enjoy music in the right format, the right context, etc.

 

We also introduced a figure explaining the shift to consumer centric services

Ekimetrics Vivendi Music Product to service disrutpion, Universal Music, Sony Music, Warner Music, Indy, Spotify, Deezer, Google, Apple, Amazon, Netflix

 

For the players who were already in the game before the Internet era between the 30s (Polygram & Columbia) and the 50s (Warner), their roots run on the production side. Since then they have progressively added new businesses in order to diversify their portfolio.   

Then came the pure digital players – the Netflixes in the video and the Spotifys or the Deezers in the music, who built their successes by leveraging on a direct consumer relationship, enabling them to build powerful consumer brands.

It is possible to discern trends and identify effective strategies by looking at this dynamic ecosystem, but it is clear that the ground is not very stable under our feet in a digital landscape that is fast moving and where innovations are fast lived.

 

At Ekimetrics we came with the conclusion that the Industry needs to do a couple of things in order to keeps its head above the water in the service innovation era: 1) Develop personalization and 2) manage the user relationship. Two seemingly simple yet complex instructions that will definitely shape the music industry in the months and years to come.

 

During the second day, we find Marie Sellier accompanied on stage by Jean-Baptiste Bouzige CEO Ekimetrics. After the storytelling of the first day, tracing the evolutions and transformations in the music industry, our two speakers took us on a user-first journey. 

 

We defined 9 profiles that best describe patterns of usages based on our expertise in CRM and customer strategy. In this presentation, a clear focus was drawn on three sub-groups, namely The Boomers, the “Y” Generation and the “Digital Natives”.

The Boomers: Product Oriented Generation

Ekimetrics Midem Vivendi, Customer Journey Disruption Music Boomers

The first group, the Boomers, represents the “product-oriented generation”. They like acquisitiveness (desire to own) and they value quality. As seen on the slide, they are outside the social web, except maybe on Facebook and on blogs.  Needless to say, they are not avid consumers of unlicensed music services. They are also mainly outside digital premium services like downloading; as shown on the graph, they are mostly buyers of offline Premium content.

 

The “Y” Generation: The Turning Point Generation

Ekimetrics Midem Vivendi, Customer Journey Disruption Music Gen Y Milenials

 

This generation can also be referred to as the turning point generation, as it the age group that has shaped and will shape the next 10 years. They are often depicted as a “high expectations – low-sweat generation” or an “army of Bart Simpsons”. More positively, they are a “nomad” generation, some of them having grown up buying CDs and DVDs, Ringtones and they witnessed firsthand the phenomenon of smartphones. Typically they own an iPhone and have been avid iTunes users for several years. These young people have a very interesting profile as they are loyal and are located outside of the unlicensed services, and they favor easy access and choice. So, they are likely to migrate to premium subscription services as they are have grown up purchasing offline content.

However, it is only as long as licensed offer is ahead of the curve, both in terms of ease of use and access, that this generation will remain loyal. But disruptive unlicensed services could induce them to move away from licensed services if they are appealing and easy-to-use.

 

The Digital Natives: The Disruptives

Ekimetrics Midem Vivendi, Customer Journey Disruption Music Gen Z Digital Natives

 

The Digital Natives are the real challenge for the music industry. The greatest discontinuity in usages happened with this generation, and is especially visible within the sub-group selected – which is also the most influential one.  They were born after the CD era and were quick to embrace technology innovations. . In the US, 74% of this generation is still using Facebook. Instagram and Snapchat are swiftly rising in terms of usage. Almost 60% of US teenagers use these platforms. They are glued to their smartphone, night and day, day and night. As a result, they are the most important drivers of virality on video-sharing platforms and ad-supported streaming services.

 

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