What the Music Industry Could Learn From Digital Marketing

According to Nielsen SoundScan’s latest report, more than 70% of the music consumed in the first six months of 2014 in the U.S. was either downloaded or streamed — and streaming services are the only part of the recorded music business that's growing. 

Digital's influence on the music industry has driven consumption and provided immense opportunity for new business, from newer entrants, like Spotify and Pandora, to moves from veteran players, like Apple, Google and Amazon. But these competing services have paved the way for a highly fragmented landscape, and it’s become a maze for artists and labels to understand — and capitalize on — fan behavior.

Like the music industry, brands wrestle with a disjointed digital ecosystem made up of social networks, ad networks and search bars. Consumers have the potential to get lost in the mix for marketers. Fortunately, standardized tracking tools now exist that enable marketers to understand how consumers behave across platforms and devices with increasing accuracy. But, music is a breed of its own — cookie-like tracking tools simply don't exist yet. Artists don’t know their true reach and can't discover comprehensive insights into their listeners, as fans travel from one platform to the next.

Below, we take a look at the modern marketing handbook and see how it works — or doesn't — in music.

Marketing technology. Deeper insight into user behavior is crucial for an industry that bears the brunt of every new disruptive technology. Not too long ago, “Are streams cannibalizing downloads?” was an unanswered question. Traditional marketers implement sophisticated tools to support marketing initiatives at every stage of the funnel. They qualify leads, nurture prospects and maintain relationships with existing customers. There are even solutions to map offline behavior and online activity courtesy of new technology like iBeacon and anonymous data syncing. However, labels and artists struggle to map the lifecycle of a fan labels and artists struggle to map the lifecycle of a fan, determine when a listener first heard a song, who the listener even is, and how to nurture the artist relationship and create a fan for life.

Real-time reporting. Radio is a black hole. Activity on Pandora comprises a huge and growing percentage of listening in the United States, the world’s biggest music market. However, like offline radio, there’s no real-time or detailed tracking of that music consumption. Services like Pandora operate under a statutory license from the U.S. government, and they are only required to provide the number of plays of a certain track on a monthly basis 45 days after the month ends, with no demographic information about the listeners. In contrast, digital marketers are optimizing marketing initiatives, like paid media and site optimization, in real time thanks to mounds of data. Imagine the benefits for artists (and fans, by way of more personalized experiences) to understand who’s listening to what music across which platforms.

Building relationships on social. Marketing’s key theme also applies to the music industry — success is all about having a relationship with the consumer (in this case, the listener). As Taylor Swift pointed out in her recent Wall Street Journal op-ed, artists are starting to get record deals because they have fans (not the other way around). With social platforms like Instagram and Twitter, musicians can take ownership of their relationship with fans and directly learn about their likes, dislikes, favorite songs and and interests. However, artists and labels face the same problems that traditional marketers face with social marketing — what ROI does a like or a follow yield? How many unique fans do I have between my Facebook friends and Twitter followers? The rules of the game can change, and it’s increasingly a pay-to-play dynamic. Exposure and engagement come with a price — just ask the 2015 Super Bowl performers.

Now, more than ever, the missing links that’ll ultimately power the business of the music industry will fall into place with innovation. Every individual stars in their own movie complete with the soundtrack to their life. By leveraging the innovation seen in digital marketing, artists can understand in which scenes their music is featured. (Securing the sync rights for the movie is another story.)