Music Industry 2.0 Moshito Music Conference & Exhibition Presentation On Technology

TOPIC Technology: How It Impacts the Music Biz, Especially the Traditional Value Chain On the one hand, technology has had a hand in the continuous downward spiral of CD sales, the rise of digital piracy and the demise of the traditional retailer. On the other hand, technology has empowered music creators and emerging labels with a platform to better connect with fans, promote product and open up new revenue opportunities. We will first look at the traditional value chain vs. the digital value chain. Understanding different players and their motives. The new model. ADAPTING!!!

TRADITIONAL VALUE CHAIN Artist: Creation Label: A&R Recording Manufacturing Sales & Marketing Distribution Wholesale: To Retailers Retail: To Customers

TRADITIONAL PLAYERS & MOTIVES Majors and independent record labels Generate revenue through album, single and DVD sales. Artists Retailers In the TRADITIONAL VALUE CHAIN all the PLAYERS had the same MOTIVE: Generate revenue sales.

DIGITAL VALUE CHAIN Digital Assets Management Recording Sales & Marketing Delivery Over Networks Devices Consumer DIGITAL VALUE CHAIN Digital Assets Management Rights clearance and Royalty payments Hosting of digitized formats Network & Device Provider Artist/Music Industry: Content Creation DRM Encoding Artist: Creation Label: A&R Recording Sales & Marketing Content Delivery Over Network Consumer Device Online media player software Billing

DIGITAL PLAYERS & MOTIVES Majors and independent record labels Trying to generate additional revenue through the digital sales format while avoiding revenue losses due to online piracy, cannibalisation of traditional revenue streams and the “commodisation” of music. Artists Trying to receive additional revenue through the digital sales format while avoiding revenue losses due to online piracy. Establish own distribution platforms to gain popularity and/or to sell music. Hardware producers Use the interest in content to sell hardware allowing functionality and interoperability. White label services Maximize revenue by catering services to digital music stores solutions. Software producers Aiming to establish player and DRM software as standard for content delivery. ISPs Use the interest in content to attract customers into premium Internet services. Content portals Retain and leverage Internet audience to attract traffic and advertising revenues. Consumer brands Increase customer loyalty through music and use music for promotions. DIGITAL VALUE CHAIN creates more opportunities BUT only for those artists and labels willing to THINK DIFFERENTLY and ADAPT to the new model.

NEW MUSIC BUSINESS MODEL

Think different and make money with music!!! Less than 10% of the music released into the market represents 70% of the radio airplay. There are many opportunities for monetization plus new and emerging business models, allowing artists and labels to make money. The biggest issue in the music industry is not the price but rather the millions of ‘free’ content (the market does not look at this as music piracy but rather free content).

Adapt to new models... It is becoming increasingly hard to develop and expose new talent. We often hear the phrase "Adapt or die”. It may seem exaggerated, threatening ... but for the music industry, these are the only two alternatives. And they have never seemed so real. Direct marketing to fans (set of marketing initiatives focused primarily on the monetization of the relationship artist and fan) is booming. This business model no longer depends solely on radio air-play or TV broadcast. It depends mainly on the relationship maintained between the artists and their fans.

Connecting with Fans + Provide Reason to Buy = Revenue Find your fans, create loyalty, give them reason to buy and you will earn money. Attract their attention and connect with them.

Technology makes it easy to connect and attract fans If you are an artist and you do not have a website, the YOU have FAILED you CAREER. MySpace might be ‘old ‘ but it is still a good idea to create you own MySpace page. Facebook is key. Why? Because knowing your fans is vital. Bandcamp is the new MySpace but even better.   Youtube allows you to broadcast yourself to the world. Email and newsletter are still a weapon of mass seduction. Twitter reaches everybody. Flickr, Wikipedia, Deezer, LastFM. All these strange words should be in your daily vocabulary. SEO (Search Engine Optimization). Get familiar!

Thabiso Khati Founder & CEO Street Music Mobile: +2782 886 2259 E-mail: thabisokhati@streetmusic.co.za Skype: ThabisoKhati // BBM Pin: 22512038 //Twitter: @HipHopScholar