Music Business Lessons For TV’s Digital Transition

It’s hard to believe, but it’s back to school time. For some, it’s about getting their kids ready for new schools, grades, and lesson plans. For those in the traditional TV world, it might coincidentally be a fruitful time for some valuable learning from their “big brothers” in the music business, who can teach them a thing or two about how to not only survive but thrive in the vastly different digital era. I spent a bit of time with a few music industry pros to help me translate their pearls of wisdom into an “action agenda” for the video universe.

For those whose memories are dim or simply to young to have them (hi there students), the 1980s and 1990s were the most golden of times for the music business (note that’s the business – we all have our favorite musical genres and eras). With the advent of CDs consumers spent billions on not just the latest music but replacing catalogs of old favorites. MTV launched in 1981, providing a free platform to promote contemporary music to young audiences. An industry with $7 billion in revenues in 1980 exploded by 5X to $34 billion by 1998.

Then the music industry hit the dark years with the first availability of music online, mostly illegally. But this “theft” of intellectual property was meeting a very real consumer desire – to get just the content you want (the “hits”) without committing to whole albums of filler. Physical format sales plunged, and the industry spent years suing users (remember “they’re suing Grandma?!”). Finally, Steve Jobs dragged the industry into the digital age, despite the reverse sticker shock for the music industry of giving consumers the right to easily purchase a song for 99 cents. Streaming options followed and exploded. After years of brutal disruption – total industry revenues fell to $15 billion by 2014 – the music business today is bigger than ever, with revenues of $70 billion in 2023. It took forever to get there, but there is a real pulse for a seemingly moribund industry.

The traditional TV and motion picture world enjoyed many years of escaping the worst of the digital assault, in part due to how much more difficult it is to access and download TV and films compared to audio. But now? We all see the accelerating shrinkage of multichannel video subscribers, audience ratings and ad dollars in traditional TV. Everyone is still testing and (hopefully) learning the right business model synthesizing linear TV, theatrical distribution, subscriptions, FAST services, ad sales, new formulas for compensating talent and adapting to AI. Music’s digital trajectory can offer some valuable lessons for the TV world – all of which sound exceedingly simple but whose execution remains elusive in video’s current structure and operations.

Listen to your customers

David Schulhof has been immersed in the music business for most of his life and absorbed its lessons from a variety of unique perches. He’s worked under legendary producer Jimmy Iovine at Interscope Records (early hip hop HQ), produced soundtracks for Miramax (the Weinsteins before…you know), founded and sold a successful music publishing company, and has now launched the first music industry-focused exchange-traded fund (MUSQ) that tracks the performance of leading music companies around the world. In simplest terms, Schulhof argues that “customer satisfaction is the key.” Consumers “want more innovation, and don’t want labels [or studios] telling them what to do.”

Dan Zucker, another veteran of multiple music industry eras as head of legal and business affairs at RCA Records among others, noted that in the early days of online music, there was an entrenched industry assumption that consumers needed to “own” their music, and wouldn’t want to just “rent” it. That melted away pretty quickly, although there is a small but growing cadre of those “returning to the fold” for vinyl. But for most consumers, the expense and inconvenience of “ownership” are rarely worth it.

The video world is well past trying to push Blu-Rays to the masses. But consumers have been sending a lot of signals that continue to get dubious industry responses. Consumers still love video content and consume a ton of it. They have been unhappy with buying the big cable/satellite bundle and spending a ton for it. But they are happy to spend money on a “bundle” of Netflix content for one convenient – and much lower – price. But unlike in the music business, where virtually all music you can think of is available on each of the major streaming platforms (Spotify, Apple Music, and Amazon Music), in video it’s still a fragmented mess. Lots of costs across a lot of apps which are often hard to navigate from one to the other. Remember “57 channels and nothing on”? Too often consumers tire of moving from app to app to find something they really want to watch at any particular time. These are all ultimately solvable problems with innovation – but as the sands of the linear hourglass drain, time is running out to respond to these consumer cries for help.

Don’t fight innovation – streaming is your future

Schulhof notes that 87% of music consumption today comes from streaming. But with fewer than 10% of the world’s cell phone customers currently subscribing to a streaming service, he is bullish on streaming’s significant growth potential. He told me that an industry “must embrace change in technology early on and must collaborate with that change rather than push against it.” As Zucker noted, the music industry did try a number of alternative digital approaches that ultimately didn’t survive. Does anyone remember the Rhapsody music player or Press Play? It took years, but ultimately as Schulhof suggests, it took collaboration with companies outside of the traditional music industry to get to a set of streaming solutions that a widespread portion of the public accepted.

Video has already lost precious years if not decades. Can you imagine if the cable industry’s In Demand service had turned to streaming in 2007 (entirely technologically doable)? Any maybe not dismissed Netflix as the “Albanian army?” Could a more collaborative industry approach with Hulu have been the one-stop streaming shop? Maybe the Netflix Death Star wouldn’t have so lethal against an energized and collaborative TV and film business. Whatever the video business is doing in streaming, it’s still a pretty big mess and no one is going to solve this on their own.

AI doesn’t have to be your enemy – it might be part of your solution

The next major innovation for the video industry (and everyone else) to grapple with “lies between the pit of man’s fears and the summit of his knowledge.” The signpost up ahead? AI.

One of the interesting lessons from the music business is how it has integrated massive data repositories into even the creative parts of the music business. A&R – artists and repertoire – used to be about hanging out in smoky bars and discovering the next Springsteen before anyone else. As Zucker noted, today it’s all about analyzing a ton of data on social media followings, YouTube consumption, and other “engagement” metrics. With everyone gaining access this data, it puts more competitive pressure on moving swiftly and smartly to partner with the right artists in a mutually beneficial fashion with a variety of customized approaches.

The TV and film industry has navigated writer and performer strikes in part driven by fears of AI’s impact. The fears aren’t unfounded, but AI – like online access to content – isn’t going away. The industry should be focused on how to use AI to enhance the streaming user experience, more precisely deliver personalized content choices, and optimize its ad products and services. And as Schulhof notes, the industry needs to get smart about the appropriate legislative framework moving forward and work collaboratively inside and outside the industry to move that forward.