A presentation given on July 11, 2017 at the Pacific Summer Institute at University of the Pacific on the shifts in media distribution and usage. These changes are causing companies and artists to move toward a more direct connection with consumers, cutting out many of the layers of middlemen that existed in the previous model.

1. Presented July 11, 2017
By Keith Hatschek,
Music Management Program Director
for Visiting Scholars from Zhejiang University

2.  Present 20th century media model and explain how the rise of the Information Age
is forcing the reinvention of media industries
 Key Points
 Reviewing 20th century media models
 Paradigm shifts due to technology
 SVOD (Streaming Video on Demand)
 Music Streaming
 21st century Challenges & Opportunities
 Questions & Discussion
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3. Broadcasting Purchased Media Live Events
Radio (terrestrial) Books, magazines, artwork Concerts
Broadcast television Recorded Music Theme Parks
Movies, Cable television Sporting Events
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4. 4

5. 5

6. 6

7. 7

8. 8

9. 9

10. 10

11. 11

12. 12

13. Millions of Bands
Best 10,000
Superstar
Music labels served as
tastemakers to insure
quality & profitability
Gatekeepers Screen
the Most
Talented
Musicians
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14. 1995 • Internet
Debut
1999
• Napster
Peer-to-
Peer
2003
• iTunes
Music
store
Game
Changers
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15. 2005 • YouTube
launch
2008 • Spotify
launch
2015
• Music
streaming $ >
sales $
Game
Changers 2
15

16.  2003 – iTunes store sells 1MM downloads in first week
 2004– Facebook launches, gaining 1MM users; 2012 = 1 B; 2017 = 2B
 2007 – 122 MM smartphones sold globally; 2017 = 1.495B
 2012 – US track download sales peak at 1.34B; now declining rapidly
 2012 – Psy’s “Gangnam Style” breaks Google’s view counter = 2B views
 2017 – US music streaming revenue predicted at $2.998B
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17.  Spotify has 50MM paying subscribers; 140 MM total users
 Apple Music has 27MM paying subs
 80% of US music listeners used an online music service (2016)
 64% of teens prefer YouTube for listening to music (2012)
 Netflix has 99MM global subscribers; 51MM in US
 Amazon Prime Video subscribers 80MM
 Number of cable subscribers in US declining by 1.5% annually
* All statistics 2017 unless otherwise noted.
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18. Part 2
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19. 19

20. 20

21. United States $5,914MM
China $888MM
United Kingdom $815MM
Germany $466MM
Japan $408MM
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22.  2017 – Streaming Video on Demand global revenues = $11B
 2021 – Annual growth of 9.2% yields $15.7 B worldwide revenue
 2017 – User penetration currently 5.9%
 2021 – Expected to grow to 9% user penetration (50% growth)
 US market dominates with $5.91B (54%)
of global earnings
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23. Part 3
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24. 24

25. 25

26. United States $4,604MM
United Kingdom $861MM
Germany $772MM
China $493MM
France $329MM
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27. 27

28. Sweden 54.6%
China 48.0%
Hong Kong 45.9%
United States 43.9%
Norway 42.3%
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29. 76%
26%
77%
24%
74%
23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
United States China Europe
Paid Subs
Ad-Based
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30.  2017 – Digital Music global revenues = $9.81B
 2021 – Annual growth of 7.2% yields $12.96 B worldwide revenue
 2017 – User penetration currently 8.3%
 2021 – Expected to grow to 30.7% user penetration (370% growth)
 Average annual revenue per user is $9.80
due to majority of “freemium” users
“One Dance” by Drake,
2016 most streamed
track, 527MM streams
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31. Global music revenue 2012-2021, by source
Music industry revenue worldwide from 2012 to 2021, by source (in
million U.S. dollars)
Source: PwC; Statista ID 239276
Note: Worldwide
400 400 400 400 500
200 400 400 400 400
1,700 1,900
2,200 2,400 2,400
2,900 2,900 3,100 3,300 3,500
12,200
10,800
9,900
9,500
8,700
7,600
7,000
6,200
5,400
4,600
800 700 600 600 500 500 500 500 500 500
1,400
2,100
3,000
3,900
6,700
9,200
11,500
13,900
15,700
17,200
5,400 5,200
4,700 4,500
3,600
2,900
2,500
2,000
1,600
1,300
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2012 2013 2014 2015 2016* 2017* 2018* 2019* 2020* 2021*
RevenueinmillionU.S.dollars
Synchronization Performance rights Physical Mobile music Digital music streaming Digital music downloading
Further information regarding this statistic can be found on page 8. 31

32. Global music revenue 2012-2021, by source
Music industry revenue worldwide from 2012 to 2021, by source (in
million U.S. dollars)
Source: PwC; Statista ID 239276
Note: Worldwide
400 400 400 400 500 200 400 400 400 400
1,700 1,900 2,200 2,400 2,400 2,900 2,900 3,100 3,300 3,500
12,200
10,800
9,900 9,500
8,700
7,600 7,000
6,200
5,400
4,600
800
700
600 600
500
500 500
500
500
500
1,400
2,100 3,000
3,900
6,700
9,200
11,500
13,900
15,700
17,200
5,400
5,200 4,700
4,500
3,600
2,900
2,500
2,000
1,600
1,300
0
5000
10000
15000
20000
25000
30000
2012 2013 2014 2015 2016* 2017* 2018* 2019* 2020* 2021*
RevenueinmillionU.S.dollars
Synchronization Performance rights Physical Mobile music Digital music streaming Digital music downloading
Further information regarding this statistic can be found on page 8.

33. Part 4
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34.  30 MM songs available on streaming services
 How to find the music you like?
 Machine vs. human curation
 Paid subscription vs. ad-based models
 Intellectual Property (Copyright) rights becoming
increasingly unmanageable in fragmented
global media economy
 Payment models and amounts questioned by artists
 Revenue from 166 streams = 1 song download revenue
 Artists and music labels struggle to adapt to micropayments
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35. Market Share Total Market Share
Revenue
Average Pay Per
Stream
Spotify 62.97% 69.57% .00437
YouTube 21.7% 3.81% .00069
Apple Music 7.18% 13.35% .00735
Google 2.36% 3.81% .00676
Deezer 2.19% 3.54% .00640
Totals 96.4% 94.08%
* Source: The
Trichordist, Jan. 16,
2017 article
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36.  Live Music – consistent growth, has yet to be shrunk down via web technology to
rival live concert or sporting event experience
 2017 US revenues $9.2 B; projected to grow 5.23% annually to $12 B (2021)
 Crowd funding – $7.2 B 2017 global market; growth to $18.9B in 2021 globally;
13.7 MM campaigns – China is the leader
 Return of patronage model – Patreon
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37. 37

38. China $5,505MM
United States $959MM
United Kingdom $138MM
France $87MM
Japan $80MM
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39. 39

40. 40

41. 41
Growing
Markets

42.  Brands will have to develop user’s trust to have long-term relevance and value to
media consumers
 Consistently meeting expectation for quality & value
 Curation must be intelligent and “slippery” from customer perspective – “Ask Alexa”
 Creators will profit greatly from crowdfunded opportunities
 Patreon provides recurring vs. one-time project financial support
 Final Result = Fan to feel personal connection with artist/entrepreneur; creates
value to the fan greater than buying a concert ticket
 Growing a larger base of “super fans”
 Talented entertainment managers will prosper in tandem with artists
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43.  Slides available at Slideshare.net “Zhejiang U Media Presentation”
 Email: khatschek@pacific.edu
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