The two types of digital music offerings available are Non-Interactive and Interactive.
The interactive area is where music savants or enthusiasts hang out, and it is also the area which drives top down discussions about music. The Interactive market is the most lucrative, but also the most misunderstood.
In a non-interactive service, the user is not allowed to rewind the bass-line lick in Gino Vannelli’s ‘Feel Like Flying’, but interactive services give the user/fan a more granular choice. We see then that the audience in an interactive service activates the music and the non-interactive follows it.
One in five millennials attended a music festival in the past year. For investors this breaks down the 80/20 rule as such. Eighty percent are interested in non-interactive services, twenty percent are interested in interactive services. The 20% are the strategic piece which will help the computer separate quality from quantity. Interactive music services want to develop artists for the new interactive market, but to everyone’s chagrin they consult with non-interactive players. This incongruence in business operations is why investors of interactive services should proceed with caution.
The radio model depends on the rare event of someone purchasing an album. A lot of people buy albums but the model can’t tell us “who” is making the purchase. A healthy industry works in synergy to understand their audience. With digital streaming we now know who is listening, who is buying, and who is attending the show. The audience is out there and the fans are out there, and they INTERact on the platform called the INTERnet.
It has become easy to listen, which makes it more difficult to share.
We’re long on INTERactive streaming.