TECHCITYINSIDER100: Jeremy Silver, entertainment industry entrepreneur and advisor to the government on investment in creative industries, has witnessed the savaging of the old music industry at the hands of digital. It’s been painful, and it’s not over yet, he says. But what’s emerging, he tells Julian Blake, is stronger and good for the wider economy
Of all of the sectors to have taken a clobbering from the advance of technology, and changing consumer patterns, few have come close to being hit as hard as the music industry. In less than 15 years, the traditional record company majors were delivered near-mortal blows by the collapse in physical sales, the emergence of file sharing, streaming, piracy and digital sales, and by the rise of technology that has allowed musicians to make, publish and distribute their creative works all by themselves. The revolution has left thousands of music industry employees holding P45s, and hundreds of high street record shops closed for good.
Despite government crackdowns on pirates and peer-to-peers, and action against companies like LimeWire and Mega Upload. today’s music industry is nothing if not digital, with legal services like iTunes, Spotifyand Deezer looking dominant. In 2011, digital sales in the US outstripped physical formats for the first time. The same is likely to happen in the UK this year.
Here in Tech City, a new music industry has been steadily emerging over the past decade to replace the old guard and cater for the new consumer. Online music platforms, music makers, gig promoters and an array of new smartphone apps for people to create, listen and share music are being launched almost daily. Soundcloud, one of the leaders in the digital music space, allows anyone to upload, record, promote and share original sounds across the web. Its international reach helped it to pass the 10 million registered user mark in January.
Jeremy Silver, a music industry entrepreneur and advisor to the UK Technology Strategy Board on investment in the creative industries, is excited by the arrival of the new. “Companies like Songkick, Soundcloud, Lastfm and 7digital, all with bases in Shoreditch, are focused on delivering a new digital music industry,” he says. “Digital media is undergoing a transformation, not just of its content but in the nature of its business model. There’s no question that music is at the forefront, because it was hit first and it’s finding its legs first.”
Silver, a former director of media affairs at Virgin Records who now offers insights into digital media, is one of few with an understanding of how the old and new music industries operate. He notes how lastfm has been a part of CBS for nearly five years: “Digital is still pioneering what the new music industry is going to look like,” he says. “But that’s not to the exclusion of the old players: new companies are providing bridges for some old players to find their way into this new space.”
So does he actually believe that digital will become the saviour of the music industry? “Absolutely it will,” he says, “although I’m not sure saviour is the right word because we’re seeing the formation of a new music industry. It’s more about transformation than about being a saviour of something old and sacred.”
Looking at the wider entertainment economy, Silver has no doubt where the toughest place to be is right now: high street retail. “We are now contemplating that we have really only one surviving chain, HMV with Game another, that retails on the high street. Both of are in considerable difficulties,” he notes.
“The only compelling solution is that the retail experience has to be more exciting and engaging. There’s no question that human nature does enjoy shopping. Physical and digital offerings could be combined more. Amazon has moved into the physical world with pick-up lockers in shopping malls. That gives a clue as to what the relationship ought to be.”
But Silver is convinced that whatever does happen, music retail will never be the same again. “This year will see digital media retail disappearing from the high street completely, apart from in supermarkets,” he predicts. “Digital formats generally will outstrip sales of physical formats across entertainment.”
Silver’s own Shoreditch enterprise, Musicmetric, exists to monitor, aggregate and analyse all music-related information on the web, creating what it claims as ‘the world’s largest music data asset’. “Our wider business, Semetric – of which Musicmetric is a part – is about presenting data to people in a way they can use in social media and other digital interaction. People are still learning how to make most effective use of an aggregated view of the data that their activities generate.”
For Silver, data aggregration is coming to dictate how companies in the music space, and way beyond, do business. “When you put all the data out there into one place and analyse it, it becomes incredibly valuable. That’s the tipping point we’re getting to now. Instead of devising your business model around what you think your fans or customers are doing, you build it around what you see them doing in reality.”
“We’re seeing more marketing and sales tools emerging,” he says. “Some are platform-based and some are app-based. They all represent methods by which content owners are reaching audiences. Some take hold, while others, especially apps, are more short-term. There’s a new digital ecosystem out there of marketing platforms and apps, but it’s not stable at all. It’s constantly changing and evolving.”
It is striking just how upbeat so many people are in the Shoreditch area, with an optimism that seems to belie much of what’s going on in the wider world. Maybe that’s the enterprising spirit? “It’s true,” agrees Silver. “And the whole economy can benefit from that. That’s why it makes sense for the government to give the kind of support to Tech City that it is. The enthusiasm and exuberance that exists in Shoreditch can hopefully be translated to the rest of the country.
“The great thing is that in the world of digital start-ups we’re still seeing lots of growth. Whether it’s sufficient to save the economy from the difficulties it’s encountering in other sectors is another matter. But if business can thrive in this environment, when an upturn does come it’s going to be really good. It’ll be the strong businesses that come through.”
Jeremy Silver – CV
Executive chairman, Semetric,
Specialist advisor on creative industries, Technology Strategy Board
Non-executive chair, Music Glue
Deputy chairman, Futurelab
CEO, Avid Education and Sibelius Software
Vice president, new media, EMI Worldwide – pioneered first online licensing deals for streaming and downloading
Director of media affairs, Virgin Records