Going back to 1999, the record company would use radio as a way to get fans to discover a new act, then monetize that investment, primarily via selling “on-demand” access in the form of CDs and, finally, drive additional discovery by subsidizing touring (known as “tour support;” a label would underwrite some of the cost of touring to help build an audience to whom to sell CDs). Touring represented a small percentage of artist income.
[Fast forward to 2015:] Over the next few years we will see [the] connection between streaming [i.e. “on-demand” access] and ticket sales become completely explicit. Streaming services will increasingly make it seamless for fans using their services to see when the artist has a local show; Songkick’s existing API partnerships with Deezer, SoundCloud, Spotify and YouTube are hints at what this could look like. It’s not impossible to imagine a time when you could possibly buy tickets directly from your favorite artist right inside your streaming service.
When that happens, artists will finally be able to see a connected picture of how their music is distributed and monetized. An act who gets 100 million streams will see that 10 million of those were monetized via paying subscribers, 90 million by ads and another 5 million fans via ticket purchases. The outcome will be a more seamless experience that results in casual music fans attending more concerts.
The key point across all of this is that the central, most valuable asset of streaming music services will be the listener data they generate. As we shift from offline radio to online streaming, artists will know how those 1 trillion tracks of music were streamed — which fan listened to them, where they were based, which concert tickets they purchased in the past — and be able to tailor personalized and richer experiences to their fans.
The TechCrunch article quoted above was published three days ago. Seems a bit prescient, as the same site revealed this breaking story earlier today:
[Pandora] just announced it will purchase Ticketfly, a Ticketmaster-type site, for $450m in cash and stock. Pandora says in a press release that Ticketfly’s service will allow Pandora listeners to better find live music events.
“This is a game-changer for Pandora – and much more importantly – a game-changer for music,” said Brian McAndrews, chief executive officer at Pandora, in a released statement today.
It’s likely that Pandora will use this extensive data set to attempt to sell tickets through Ticketfly to events it knows listeners will enjoy.