i3 - January/February 2020 - 46

TECH THIS OUT

OWN
OPINION

YOUR
DATA

By Lauren Bissell

oday, I believe the biggest problem in the
music industry is a shrinking financial pie.
This affects all aspects of the industry - artists, labels,
studios, distributors, managers and agents. When an
industry is under distress, companies look for new
revenue streams. Big data is that revenue stream.
The application of data analytics in the music
industry has given us lots of useful tools. It allows
artists to determine which markets are the most IMMUTABLE
Music
profitable so they can spend marketing and touring
Founder
budgets wisely. It allows consumers and fans simple Lauren Bissell
and convenient luxuries like tailored playlists or better music recommendations. All of these use cases
deliver real value and pose little threat.
The area that brings us into the danger zone is the
sale of big data sets. Distribution companies like
Spotify, Pandora, Netflix and Apple for example are
dependent on data-driven models. Sure, they distribute music as their public facing service, but behind the
scenes they're essentially in the business of selling
information as a monetizable asset. Fans essentially
are the product.
Consumers seemed fine with this initially, until these
data sets were used for more than just regular ad targeting. When data was leveraged for political campaigns
without consumers' knowledge, people woke up.
Data analytics is fairly new, and when disruptive
new technologies take hold, it's normal for ethics
practices and legislation surrounding that technology to swing like a pendulum that hopefully lands in
the middle.
But there's two major problems that must be
solved before that pendulum can rest. First, fans and
consumers are angry. They've woken up to the fact
that their data is being used without their knowledge. The average American has given up a minimum of 5,000 data points (aka their personal
information) to corporations without knowing it. We
have to engage in the right kind of discourse and

JANUARY/FEBRUARY 2020

come to a consensus on what's
ethical. That will be turned
into new laws and legislation.
Second (and this will hurt
the entertainment industry),
data-driven companies have
to adjust their business models to handle the changes that
are coming. Data is keeping
the lights on. Unfortunately,
most of these companies have
taken advantage of the "Wild
West" nature of data laws,
especially in the U.S. When
the legal structure (or lack
thereof ) changes abruptly,
they will lose a revenue stream
that was keeping them afloat.
Privacy laws vary by country,
with the U.S. being one of the
most relaxed in regard to data
compared to Europe, but that's
changing quickly. Companies
here face the potential to suffer
the most as their business
models depend on soon-to-be
outdated legislation. Already,
consumers can decline the
tracking of their data when
they visit a website, and still
use the website. Mobile apps
and social media platforms will

soon be required to provide
easier methods of controlling
data collection.

WHAT'S NEXT?

The future status of data is
very similar to that of intellectual property (IP). Data is an
asset. Companies may be collecting it, but consumers are
the source and will soon own
their own data, legally.
IP is licensed. Real estate is
leased. Data could soon fall
into an existing asset class or
become its own, and the renters of that asset will have to pay
for it. Studies prove that users
are more likely to provide more
data if they know what it's
being used for and that equals
more profits. If that profit is
shared, the model will not only
survive, it will thrive.
If the music industry finds a
way to reward consumers for
the money-making data they
provide, they will set themselves
up for a sustainable future.
Lauren Bissell is the Founder
of Immutable Music.
I T I S I N N O VAT I O N

i3 - January/February 2020

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