Is It Time For Music Industry To Rethink Its Relationship With Gaming? [Karol Severin of MIDiA]

Music consumption, particularly in the West, is commoditized. Transforming from the economies of ownership to access and the removal of production and distribution barriers led to the devaluation of, not necessarily ‘the song’, but of  ‘listening to a song’. Firstly, more music is created and distributed than ever before, and secondly, music is more readily accessible without paying a premium than ever before.

For the music industry to untangle itself from a potential race to the bottom (fuelled by price wars, bundle wars, and content wars with market entrants who are not dependent on profit from music), it needs to find new ways of monetising fandom, instead of consumption.

In the ‘old days’ selling a CD in itself was a way of monetising fandom, because paying a premium for an individual artist’s work bought the sense of belonging to the ‘fan club’, bragging rights, and a sense of expertise about the artist over peers. Today this is very different – many consumers cannot name many of the artists or even songs that pop up on their playlists. The song was recommended, they clicked ‘save’ and forgot it. Next time it comes on, it will add consumption value in terms of streams, and the sense of ‘I like this song for the price I’m paying for this service’ – not the artist. While the consumption value is still there, the fandom value is now diminished.

At the risk of saying something controversial, getting consumers to ‘listen to songs’ might no longer be the most optimal way of generating nor monetising fandom.

The games opportunity is clear…

As entertainment formats intertwine, multiplayer online games have been making strides to become the next-generation venues for fan experience. This was not caused by COVID-19, but instead catalysed by it. Games are quickly becoming the place of fandom and image expression in the digital era because:

• Digital image expression is more important than ever before (a testament to this is buying increasing amount of in-game items which are purely cosmetic, i.e. don’t buy any progress in the game)
• Games are interactive, which allows consumers to create and share unique experiences in the digital environment, across all content formats. In this aspect, the closest competitor to games is social media.

Meanwhile, the audience is ready. 13% of online multiplayer gamers buy physical music merchandise, compared to 8% of music streaming subscribers and 4% consumer average. Furthermore, 25% of online multiplayer gamers buy digital items in games, compared to 8% of music streaming subscribers, 9% of PC gamers and 4% consumer average.

Bringing live concerts inside games was a good first step. In days without IRL live events, it is a powerful way of generating and maintaining fandom. But this needs to go a step further, and actually become sustainably monetised by the music industry side. An artist can only perform so many live gigs in a day, therefore designing a framework that enables continuous monetisation of artist fandom, without the artists having to be present at all times is vital. This will involve things like selling ‘in-game audio merchandise’ (e.g. buying an audio scream for a player’s avatar, recorded by an artist), artist-related digital accessories and memorabilia, various tiers of premium and super-premium digital live experiences, pre-recorded experiences and much more. A lot of this is already happening, and there is no shortage of creativity in the music industry, so no doubt it can come up with appealing offerings to monetise digital fandom.

…But capturing the games opportunity fully requires adjusting the traditional ways of thinking about music monetisation in games

The real challenge for the music industry will be to reinvent the way it currently participates in the gaming opportunity. Usually, current deal types regarding music marketing and monetisation via games still are:

• Place a song within the game (sync)
• Prompt players to use a song on top of their games-related content (e.g. influencer and streamer deals)

Both are geared to make the old model (monetising music consumption) fit into the ‘new world’ (where fandom needs to be monetised). As a result, cross-entertainment music experiences are often used as marketing vehicles for driving streams and ticket sales, rather than becoming the monetised assets themselves.

If the end game remains to ‘sell the song’ there is a risk of the largest games worlds growing large enough to compel artists to publish directly with them for ‘digital fandom monetisation services’. as they will own a part of the marketing power and potentially a lot of the fandom monetising power.

For this risk to be minimised, the music industry and its catalogues need to become a part of the in-game retail infrastructure, rather than pursue the role of a third-party song provider in a visually-driven proposition.

The time is right to explore deals and strategies outside the box, whether it be developer-like revenue share on in-game items, or ‘renting out digital land’ for a digital festival with the right to sell items in the fenced area, the sky is the limit.

If the music industry wants to truly capitalise on the gaming opportunity, it needs to become a part of it and enhance it with its expertise and assets, not just settle for supplying it with its existing products.

If I were a record label decision maker, I’d be looking at hiring developers, avatar designers and audio merchandise producers as seriously as I look at signing artists right now. 

Some do this already, for everyone else – it’s time.