Sustainability and Social Entrepreneurship :: Time has come to innovate with Empathy

Landscape 2020: Music creation and consumption is on an all-time high. Over the last 15 years, digital music has been running up an unpaved path. Digitization and digital distribution have made the production of music easily accessible and readily available to music fans. This unified ecosystem of digital music now reaches to >40% of the global population.

Before the digital age enabled by innovations in the tech sector, the record labels and publishers were the most significant contributors to building physical retail. With funding from the record labels, many artists got the opportunity to record in expensive studios, besides collaborating with versatile music producers. On the sampling side, Radio and Television became the prime drivers to build listenership and popularity, while live performances remained an engagement point between the artists and their fans.

While music has shifted from high margin/low complexity distribution of shiny plastic discs to low margin/high complexity distribution of digital streams, there are many reasons for the industry to contribute to a more sustainable future. Not just the music industry, but all creative industries need to put their heads together and develop new Business Models. Social Entrepreneurship is an area that can contribute to a more substantial change, and Empathy has a crucial role to play, more so because humanity is crossing a dark time due to coronavirus.

(1) Did the Business Models evolve enough to counter Roadblocks?

In the last 100 years, creative industries have suffered to evolve with the advancement of technology, a significant roadblock in the innovation cycle towards a sustainable industry. Their struggle has always been around distribution, monetization, and building new products. Interdependence on the intermediaries, be it tech advancements or services by aggregators, has been one of their biggest hurdles. Not only this prohibited growth, but it also came with a factor of control and dependency.

When we look at the business from the lens of a creative artist, we witness two things — a) they have unique audiences, b) their ability to engage their fans directly is dependent on an ecosystem that is fragile and fragmented.

Business Models in a Snapshot. Illustration by, Vivek Paul (www.gatsvy.com)

While the music business underwent many changes due to advancements in technology, revenues from the ’80 and ’90s remain the golden period. While the global music industry touched 40BN$ in the traditional physical business era, the last century also comprised off:

  1. The book publishing business which remained linear in royalty and advancing to the authors.
  2. The art industry evolved from commissioned work by patrons into premium remuneration due to artists seeking freedom for their expression.
  3. Digital business unveiled new business models over the traditional business practices of work for hire and royalty-based licensing. Subscription and Rental of artisans skills or their creative works became focus areas.

The music industry struggles with the eroding value of the assets by almost 35–50% every decade. The effect of erosion links to technology advancements and not being an active partner when the markets evolved. While cloud computing and streaming-based businesses have created a sizable transactional eco-system, sustainable and scale revenue streams for copyright owners are yet to develop. Perhaps, due to the stakeholder’s focus on the top end of the pyramid, upfront and minimum guarantee drove financial arrangements.

Music Royalties in a Snapshot. Illustration by, Vivek Paul (www.gatsvy.com)

Creativity and innovation cannot thrive in a trading-control driven Mindset. Despite sizable capital infusion through venture-based financing, engaged consumers, data tracking, digitization, digital payments, and the introduction of new techs like AI and VR have very little impact on the consumer ARPU or increased the copyrighted work’s value. In the Music industry, Mindset is the biggest hurdle to cross.

Streaming and Venture Capital businesses have mushroomed in recent years. For creative content, they are yet to combine strengths. The vulnerability and low conversion from Free to Paid subscribers creates a significant challenge for scalable revenue streams for content. Hence, capital investment decisions skew towards consumer tech-driven products.

(2) Innovations by Design — A need or Circumstantial Opportunity

Forty thousand years ago, when the Bone Flute was invented, Music became an adopter of innovations and technology. The adoption goals interlink with a willingness to accept change. The artistic side of the creative industry embraces it faster than the intermediaries and record labels. Thereby, two prominent sides — Artist and Technology.

While we can measure how technology moved in the last 150 years, there is evidence that the artists were equally responsible for creating new markets through their evolution. While the Human Skills and Technology matched up, the missing link remains on the asset side, i.e., the software (a song, image, or a video).

Shifts in tech create new markets and open avenues for new business models. The creative industry is reactive by nature and misses the creation of substantial value despite the creators being proactive, which is due to their dependencies. The interdependency between Tech & Content is quite clear, but the value creation is one-sided and leaning towards tech.

Tech entrepreneurs fulfill the investor’s aspirations of higher ROI through successful exits, M&A’s, or becoming Unicorns. It works well with the investor’s thesis of the multiplier on successful exits. The creative business, especially the content creation side, is marginalized due to its business model’s focus on services, work for hire, and share of transactional revenue.

There is a consensus that in every decade, the music industry loses 50% in its asset value as new technology enters the markets. It is visible in context to the revenue size of the creative sector vs. the technology companies. While tech companies create valuable businesses using content, the content businesses remain happy shrinking. Globally, the music business is yet to reach 22BN$, which was the industry size in 2001 when Napster hit.

“The Indian music industry was valued at around 15 billion Indian rupees at the end of 2019 and was estimated to reach 20 billion rupees by the end of 2022” — Statista (Link to the Report — CLICK)

At this point, the effect of Coronavirus is not factored in with regards to projections done for the Indian Music Industry. Market information suggests an erosion of >30% in digital music revenues. This means the business pushes back 3–5 years, and it will take a while before the markets spring back to the traditional milestones.

At this point, the notion that India is a soundtrack market because of Bollywood is no longer a reality. Coronavirus stalled Bollywood, Independent Musicians such as Prateek Kuhad, Ankur Tiwari, Emiway Bantai, Neha Bhasin, Sherrin Varghese not only climbed the charts but set new benchmarks for independent music. It indicates that the control and enforcement based approach does not match growth objectives. These are the same practices that have kept the music business away from scalability, innovations, providing equal opportunities, and fair trade practices.

Typically, in the recorded music sector, innovations have been circumstantial. Markets have witnessed complacency ever since the physical business started to decline. Constant conflicts in the ideologies between majors and independents prohibit coexistence. While the majors have a philosophy of control and divide to rule, the independents struggle for recognition and visibility. Between such conflicts, we have seen multiple breakthroughs in musical hits. It reinforces the fact that music is a viable business for an artist, as long as they control their creativity and destination.

Music Innovations in a Snapshot. Illustration by, Vivek Paul (www.gatsvy.com)

(3) The Allied industries

The music business has deep integration with allied industries. They feed off each other and are seamlessly engaged to promote each other’s objectives. Looking at a few core sectors where music casts a shadow, individually, they remain independent enough to be isolated on consumer participation, engagement, commercialization, and identity. Fashion, Sports, Education, and CSR are the primary candidates that ring-fence the music industry.

Just like music, the Fashion industry had its fair share of innovative moments. Starting with Sewing Machine, it moved to Ready to Wear Clothing, Exporting, Mechanised Production Lines, Automation, Mobile Trading, and Artificial Intelligence becoming the new Designer. One of the most significant contributors in this sector is the Women Workers in the last century. >40% of skilled staff and entrepreneurs are Women. Their contributions make the industry stable on two aspects — income creation for their family and creativity, which is distinctly different from masculinity in design.

The Business of Education is an exciting segment. On one end, it has moved from Gurukuls to Campuses and Skill Development, Query a Professors, Home Schooling on the other extreme. Online education and distance learning are finding their feet in the current world. Meaning, we will get to see new business models emerge in this sector too. One of the areas to disrupt is the long time horizon in which academic education goals get fulfilled. Music Education, which links to Skill Development, Learnings for income creation, Specialisation for Artists, and learning the tricks of Business, in general, are areas of development and empowerment. There is a new debate emerging on the topic of -Learner’s Journey vs. Academic Knowledge.

Sporting events have a high degree of music engagement both via performances and playback of music. The sporting events and venues make a significant contribution to licensing music. Besides, there is a lot of music synchronization, and the development of unique content such as team anthems, marching bands, artist songs, soundtracks, and more. Companies like Redbull, FIFA, World Wrestling Federation have their own focused Music Intelligence groups. Innovations galore in the sporting arenas, including Time Tracking System, 3rd Umpiring, Clothing, Goal Line Technology, GPS Tracking, Virtual Imaging, Fan-Pundit Tech, Neuroscience, Video Tech, Radar Guns and much more. Like Folk Music, Villages Education, Handicraft, and Artisicians, Rural Sports has come a long way to becoming eSports.

Prof. U A Atavankar, Adjunct Faculty, IDC School of Design, IIT Mumbai, presented a case for Design Thinking 3.0, which marries Academics x Creativity x Technology. The key emphasis for all innovations in the future inter-connect with how research and years of accumulated knowledge crossed over to build real Sustainable products, Innovative Businesses besides being environmentally conscious and elevating humanity.

Integrity. Illustration by Vivek Paul (www.gatsvy.com)

The Integrity illustration brings attention to the characteristic equation, where each of these diverse sectors converges and TRUST being the soul encompassing everything.

(4) Is SSEE* the change that is needed?

[* SSEE = Sustainability, Social Entrepreneurship, Empathy]

Empathy is the way forward for all organizations and humanity at large. Creative Industries need to bring it to the center of their design and thinking process. To solve problems, being empathetic is the best tool in developing the ability to connect emotional and intellectual experiences with one — another. Researchers indicate that all creative products are social in nature. They desire communication and expression, whether it is language, art, politics, or general life relationships. Innovative Businesses, Music, and their allied industries are emotional exchanges in nature. There is a bond of trust between creative work, fans of the creativity, artists who create them, and the marketer’s objectives.

At this point, due to coronavirus, the human race is passing through a dark phase. The darkness is surrounded by uncertainty and fear, resulting in all sorts of negativity in human relationships. It is but natural that the loss of life, jobs, and restrictive social movements are going to take a toll on the environment, survival, and assets. Inner engineering, as the spiritual growth leaders point to, provides a basic fact that time has come to unveil a new business model in the creative industry, beginning with Music.

“Festivals are like mini-cities, so their practices can be scaled up and replicated if they can improve”- Professor Rachel Dodds, who studies sustainable events

A large part of the last century got built on control and transaction economy. As we morphed into the new digital world, we dealt with an attention economy and relief programs. However, there is a struggle for survival in the first instance. The industry has gone through the endless cycles of EBITA (illustration). There is a need to bring a change in the philosophical thinking of the industry’s mindset. The shift in the thought process will allow a path towards a stable and scalable ecosystem. Hence, sustainability delivers on two goals — Profitable Businesses and Environment-Friendly applications.

EBITA. Illustration by Vivek Paul (www.gatsvy.com)

Music Business carries a massive responsibility for sustainability and social entrepreneurship. While Record Labels, Streaming Services, and Promoters are the most prominent parts of the business. Their public perception is towards music creation and its licensing. Their efforts towards social change do not become visible, such as Live Concept Promoters going plastic-free, carbon-neutral, organic & vegan food, reducing carbon emissions, or the impact of streaming services on the environment.

Internationally, Coldplay announced in November last year that they are not going to tour until they can figure out a climate-neutral or climate-positive way. Concerts Touring has a massive CO2 output. Reports suggest U2‘s 2009 tour has produced the CO2 equivalent of flying to Mars and back or the annual waste produced by 6,500 British people, or the same as leaving a lightbulb running for 159,000 years.

The first step towards making any change is to map it. We have to analyze and understand the extent of the harm done and how much more work is needed to make the change. It then becomes easier to research and identify areas of high impact. Generally, not all artists and professionals understand the effects of concert touring or music has on our environment. Therefore, a primary step is to read, learn, and understand.

(5) Social Entrepreneurship; A deeper understanding

“We heard that sustainability should be a top priority in research, education, and impact. We also heard that the structure should be inclusive, and all aspects of the university require sustainability .” Prof. Noah Diffenbaugh

The business of creativity has three aspects; Emotions, Artists, and Fans. Their combination takes shape into an industry and gets split in different forms of artistic expressions, be it Theatre, Art, Music, Cinema, or Live. Creative businesses continuously evolve to invent and reinvent. Within their evolution process reside markets for consumption and needs for innovations. The evolutions include adapting to changing market dynamics. Social Entrepreneurship becomes an essential tool to develop a grassroots level industry when such changes take place.

In India, CSR plays a vital role in communication, creativity, and upliftment of our society. Hip Hop, RnB, Folk Music, Devotional, Classical, Jazz & Blues Music are some of the genres that work outside the mainstream commercial Pop and Rock Music. With a significant content bank, artist clusters, and capital that exists outside the marketer’s framework, we can see a new design for a new business model waiting for a mass level adoption and engaging the markets to its fullest potential.

The impact of coronavirus warrants thinking towards the *SSEE’s design, with Empathy and Being Empathetic being the center point. Relief Concerts, Fundraisers, Memorabilia Auction, and the notion of giving back to society, humanity is deeply embedded in the core philosophy of the creative industry. On average, creative artists spend 10–20% of their time on philanthropic work, either through their charitable organizations or partnering NGOs. Annually, ~ 1% of music and video content gets explicitly created to address social issues.

Social Entrepreneurship is not limited to Not for Profit ventures; it crosses into skill development and talent-employee welfare programs parked within an organization’s core business strategy. Universal Music Group has a Diversity and Inclusiveness Initiative built within their corporate policy. The design of the program has a focus on the millennial generation and empowers them to become thought leaders in the future.

(6) Case Studies

(1) #Bridging the Rural-Urban Divide: Anahad Foundation has a path-breaking story in music innovations and social good.

“Though technology has advanced over the past decade, its affordability has decreased in India’s rural areas, furthering an increased gap with the urban societies.

To address this problem, we came up with a hypothesis that if we could provide marginalized folk musicians with the same production technologies and techniques that are in use in the high-end studios, folk music can genuinely compete with mainstream music. Also, the artist can present themselves digitally, thereby increasing the demand for their live performances.

BackPack Studio™ got incubated to solve this specific issue. Equipped to do Multitrack recording, the studio is battery-operated, taking a few minutes to set up right at the artists’ doorsteps. Over the last three years, we have worked with >2500 artists creating 500 original recordings. Our dedicated and focused efforts have resulted in most artists seeing their income increase multi-fold due to this initiative” — Abhinav Agrawal, Founder — Anahad Foundation.

Abhinav Agarwal, Founder, Anahad Foundation — anahad.ngo

(2) #ToEmpathise, #ToEmpower, #ToElevate: The journey of the Fashion Revolution began in 2013, when 1000 garment industry workers died during the Rana Plaza factory collapse in Dhaka, Bangladesh.

Suki Dusanj-Lenz, Country Head, Fashion Revolution India — fashionrevolution.org

“We recognized that systemic change needs to happen for a better fashion industry to exist. We could only do that with the power of people, governments, and industry. To bring all the stakeholders together is like climbing a mountain in stormy weather. We took the challenge and started creating a tribe through empowering actions, information, and resources. In the last 7 years, we have become the world’s fastest-growing sustainability campaign in the fashion industry.

Practicing Empathy is core to our existence and our work. We care about the conditions in which people work, the impact fashion industry practices have on the environment, and how we can collectively contribute to humanity, better their lives, and their surroundings.

Empowering the end consumer & industry workers forms a big part of our daily work. We are active in >90 countries worldwide. Our engagements are through campaigns, partnerships, and intelligence.

Being empathetic also helps in creating systematic changes, enhancing team spirit, and an increase in productivity. It is a skill to be nurtured amongst all the leadership positions. We believe Empathy is a fundamental pillar of change, advancement for a better society and human race”. Suki Dusanj-Lenz, Country Head — Fashion Revolution India

Redbull’s Amaphiko Academy is an excellent example of how Social Entrepreneurship programs work, and diverse entrepreneurs get trained to do social good.

#NoFilters: The Story of ShowCase Events — Sailing through the roughness of Pandemics. Maintaining resilience, being empathetic, and determined enough to innovate as social entrepreneurs.

ShowCase Events is one of the leading specialists working on sustainability in the folk music genre.

“ The COVID 19 onslaught has impacted the live performance space immensely. The artists, be them folk or others, whose only source of income was from live events, are finding it hard to be able to survive. The reason being they don’t know anything but music.

We started work, primarily with folk artists, with the intent of bringing out the real true undiluted sound and talent. We developed and presented the first-ever musical production with folk music, with Rajasthani folk artists, called Sounds From The Desert, and wanted to take this across different geographies and make our folk artists the ambassadors of Indian music heritage.

Now, with the lockdown, it’s become imperative for us to first help them modify and re-invent themselves and this entire space, and at the same time make the efforts sustainable, both for our artists & business ventures. Our current priority is to educate them on basic technology that they can use on their own, get inducted to the digital ecosystem, unveil their creativity to the world, and start creating a path towards sustainable digital income. Overcoming hurdles of remote management and speed with the elevation of intelligence is required. It is an uphill task, but we feel and carry a strong belief that our time & work is in the right space. Music will help us heal and elevate human lives” — Nanni Singh, Chief Executive — ShowCase Events

Products of www.showcaseevents.in

(7) To Script a new business model. Steps and Process

We need to keep into consideration some points while creating the next business plan for a sustainable future within creative industries. They are reminders to us that we cannot have a steadily diminishing value for music.

First of all, we need great music. When we look at the music from the ’70s through the 90’s they still carry a significant weightage on the consumption charts. Many streaming applications, including Spotify, claimed that throwback songs were on the rise at the beginning of COVID.

Music has a longlasting impact on humans, and it shapes people’s lives. Fans have their memories attached to their favorite songs. The matchmaking gets done through the hard work of the A&R associates. The value in music comes from great songwriting and a higher focus on production values.

Streaming services like Spotify indicate that songs that find a special connection with their consumer’s memories in their lives. Such songs have a higher recall. It highlights that independent music is on the rise alongside collaborations. To build a sustainable industry over and above such practices, A&R is the biggest asset enabling new music and introducing new artists.

In addition to finding talent, creating timeless music is still of utmost importance. Producers who can take a great song and help a performer make it even better. Creating a full audio package helps is the sustainability of a musical product. Quality music has a longer life. It will find itself in significant sync deals years and years after the release of the music. These songs get taken up by sports teams and leagues; they stand as anthems for social and political movements. Quality music never dies even years after those who created it do.

We already have transcended into the digital age, which perhaps does have a more sustainable impact on the environment. We should stay put, at least until we find the next more sustainable model. However, royalty accounting needs to become more reliable, and thus, music data needs rampant progress.

It should now be evident that the data identifying recorded music and its split ownership rights is a crucial component linking the money flow between Great Music and Engaged Fans. Without precise data, no one knows who created the music, how to license, whom to license it from, whom to pay, or how much royalty is.

The disarray of music rights data is the industry’s most significant problem when it comes to royalties calculations or paying the rights owners. We need to up our game and recognize that metadata is clean for calculating usage, payout of royalties, and protection of IPR. Just like the post office or an IP address can track seamless information, error-free metadata can help build transparent and sustainable business practices.

As music becomes more and more accessible to create and consume, it finds itself rushing into the background. Sustainable growth and profitability in the businesses cannot achieve successes with a series of discrepancies in the process. Management of millions of musical works and billions of users daily, monthly, is a daunting task. Discounting, offers, and similarities in pricing are other vital contributors that enable diversity in consumer base.

Music is inherently tribal and made up of niches and individual preferences, but we have not yet digitally solved the consumer needs. We now have a new baseline in the streaming adoption upon which we must build a unique framework. We must create new products or services that can bring stability and scalability in the industry that gets battered every time there is an innovation.

The only way around this is to innovate using music, tech, and ethics. “winner takes all” is no longer the mantra. “win-win-for-everyone” is the slogan for the future. It resonates well with the new world order based on sustainability.

The new world does not need any warriors; it is searching for entrepreneurs who can build profitable ventures, are worthy of human trust, and remain empathetic in their core — Vivek Paul

1 Slide High-Level Business Plan. Illustration by Vivek Paul (www.gatsvy.com)

#Highlight — Music Industry Forecast for 2020 by Gary

2020 may be a tough year for everyone working in the creative industries. It also becomes an opportunity for us to ensure that such restarts do not hurt us again. Here is some food for thought.

By, Vivek Paul in collaboration with Srishti Das

  • The views of the author and collaborators are personal.
  • This resource is created to invoke precision thinking in the creative industry, especially the independents in the music business.

Thank you for stopping by here and spending time with our thoughts! Stay Safe and Blessed.

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@vivekpaul I www.linkedin.com/in/vivekpaul

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Vivek Paul

Vivek Paul

@vivekpaul I www.linkedin.com/in/vivekpaul

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