Long Players: Why Music Tech Continues To Attract Investment – Forbes
Anna Zo, of Music Tech Europe Academy says there is a lot of scope for innovation in the live music … [+]
Music tech doesn’t grab too many headlines these days. The revolution in music distribution and consumption first brought about by Napster and later fully commercialized by the likes of Spotify, Apple and Deezer is now fully embedded in our lives. Indeed, the vinyl revival tends to generate more column inches.
And yet music tech is everywhere. If we go to see a live show technology drives the close integration between music, lights and background video. When the last Beatles record was released, it was AI that enabled a poorly recorded vocal by John Lennon to sound like a professional take. And when we buy tickets, the secondary markets and surge pricing are underpinned by technology.
But the question remains. How much room is there to not only innovate but also disrupt and do companies working in the sector have the growth potential to attract VC cash?
Well, according to figures published by Digital Music News, companies in the sector attracted $10 billion in equity investment in 2023, double the amount secured in the previous year. There’s also a degree of public money providing support. For instance, this month an accelerator programme titled the Music Tech Europe Academy put a call out for startups to take part in its 2024 cohort, with backing from the European Commission’s Creative Europe program. In the same week, British record label Tenwest announced that innovation agency Innovate UK was providing grant funding for Future Mode, a new artist promotion platform.
So what is the appeal of music tech? I spoke to Anna Zo, project manager at the Music Innovation Hub and Rubin Patel, co-founder of Tenwest.
Based in Milan, Music Innovation Hub was established to support new music technologies and business models while also driving social change. In 2021, the organization launched its Music Tech Europe Academy accelerator program. As Anna Zo explains, in the post-pandemic period it was at virtual project. Nevertheless, there was a decent response to the first call for participants with 60 applicants. Ultimately, ten companies joined the first cohort. The latest program is an offline/online hybrid opening at the Linecheck festival in Milan and closing at an event in Barcelona.
“The program is based on mentorship,” she says. “We have mentors from all over Europe. They come from very different backgrounds, geographically, professionally and culturally. In this way, we support companies to get to know new markets. The mentors are willing to open up new markets and we encourage participants to take a European perspective.”
All the mentors have entrepreneurial skills but they also have music industry knowledge. “That’s very important. We get a lot of companies that say they are going to disrupt the music sector but who have no idea how the music industry works.”
The mentors can use their experience and contacts to identify whether a particular product has a market. In addition, the accelerator helps to build contacts with investors and also advises participants on using the most appropriate technologies.” The partners include investor network Media Deals and innovation support business Technoport Luxembourg.
The music industry is a multi-headed beast. So where do the opportunities for innovation lie? “There is currently a lot of talk about AI a lot and music production,” says Zo. “But I see a lot of potential in the live sector – for instance, digital solutions for live performances.
There is also scope for crossover projects that connect two or more industries. “I see a lot of projects that are not focused on music in the traditional sense but on collaborating with other sectors. Not just video games, which is an obvious sector, but also areas such as wellbeing and health.”
Then of course, there are companies working on marketing and data solutions. “For instance solutions that can turn data into actionable strategies.”
Zo cites the example of Arenametrix, a company providing customer relationship management solutions for cultural and sports organizations, enabling targeted marketing and experience management.
Marketing remains an important focus for music industry innovation, not just for record labels and concert promoters but also for artists.
Rubin Patel is co-founder of Tenwest, a UK record label that is developing Future Mode, a marketing tool for artists to help them promote their products in a music industry where it often seems there are more songs than listeners. He cites figures from a recent report by Luminate.
“There are 45 million songs released online that have zero listeners,” he says. Drawing on Tenwest’s experience of generating streams (600 million to date) for its artists, the new platform is aimed at helping musicians – without the resources to hire marketing teams – find an audience. As he explains, it offers up marketing plans based on the artist and the target consumer. Music industry strategies have been leveraged into an AI-driven platform.
Indidualization is key. “People are given a lot of advice. You have to post once a day, do face to camera content, or put out speeded-up or remixed versions of your songs. But it’s not that simple or straightforward. It depends on the type of artist you are and the type of music and space that you’re in. Having a targeted and individualized approach is more effective for the artist. ”
The project has been funded by Innovate UK, a publicly-funded body charged with helping companies to commercialize new products. I ask why he thinks a marketing tool aimed at helping musicians hone their social media and streaming strategies was of interest to an agency that is often focused on cutting edge technologies. His answer suggests innovation in the music industry can have a much wider resonance.
Innovate has a focus on AI,” says Patel. “And I think that has become clear in their creative catalyst program. They are giving grants to companies that are utilizing AI. That was how we came into it. Through feasibility studies, we have demonstrated that we can apply these new technologies in a way that is going to work.” Meanwhile, Anna Zo thinks the European Commission backed The Music Europe accelerator, at least in part because of the focus on social change and diversity and a commitment to levelling up innovation across the continent.
As Patel points out, historically, the music industry has been at the spearhead of innovation. “In terms of media formats, music is the first port of call for innovation. The speaker came before the TV screen. Audio streams came before video streaming. Music is always an innovative space.”
As he sees it, a lot of investment is flowing into music production at the moment, but the scope for innovation is much wider. “There is a whole supply chain and a lot of problems that need solving once a song has been created. Problems that deserve attention.”
The global music industry continues to grow. Recorded music generated $28.6 billion in 2023, according to the International Federation of the Phonographic Industry. Added to that, there is the income generated by live music. Here in the U.K, that hit a record £6.1 billion in 2023, according to figures published by music federation, LIVE. Within that industry, music tech is something of a niche, but there are opportunities not only to generate revenues but also test out new technologies in areas such as marketing and AI utilisation.
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