London's music industry; not dead, just reincarnating

Ahead of Internet Week London we catch up with Robert Higginson of Par Equity to talk about the future of the music industry

Sitting on the outside and looking in, the music industry is not a pretty picture at the moment. Fingers up against the glass, all we can see is bad news followed by more bad news. The death of HMV; the constantly unfurling demise of that great British icon EMI; the likes of Pirate Bay and Spotify dealing out free music, like tuneful Frisbees, to all who wish to receive it. It’s enough to make you weep into your vinyl.

But there is another story. A story that is building under our feet, gaining strength from Shoreditch High Street to Abbey Road, about to leap forth and grab recording artists before they fall over the precipice of destitution.

Ahead of his appearance at Internet Week Europe in London next week, Robert Higginson, partner in investment firm Par Equity, tells us why the music industry as we know it is not dead.

LLB: So, Robert, is the British music industry heading for a swift and painful demise, or can we afford to be more positive?

RH: It’s all a matter of evolution. There is no denying that the music industry is going through a huge and tumultuous period of change, but that is something that happens to every industry at some point. Technology develops. Ultimately every type of business must go through an evolutionary process.

One analogy is the newspaper business and the huge upheaval they went through in the eighties. Some people would argue that newspapers are dying, but there are still new publications being launched - and media outlets are embracing the internet.

The huge change in the music business has been followed by a rise in the number of innovative companies popping up and creating value in terms of jobs, developing new technologies and in finding value for record companies and artists.

LLB: Music to our ears. Can you give us some examples of these companies?

RH: Of course. We have picked up on three particular companies that illustrate these changes.

  • Pledge Music grew up in the States, but has an office in Covent Garden. They present an alternative to the traditional music industry model by utilising crowd funding. There are other companies using the crowd-funding model but this is the first time we’ve seen “fan funding”. Fans pledge money to their favourite bands and basically step in to fund their favourite artists in the way record labels used to be able to do. It’s perfect from a record company’s perspective as it provides money and a good intelligence base to see whether or not bands will fly.
  • I Like Music (ILM) has been established to monetise probably one of the most complete record collections in the world, comprising of over three million tracks. They are also a successful music magazine. They have purchased this valuable asset and are finding new ways to monetise it to commercial audiences.
  • Opertunes is my final choice. There is currently no single search engine or neutral marketplace for commercial music. The current model is hugely inefficient and overly costly. Opertunes has large access to stock music and has found a way to deliver it to clients through a revolutionary search technology which enables relevant music to be found quickly.

LLB: So with companies changing the way we make money from music, what does the future look like?

RH: Record labels are not dying. If anything, there will be many more labels. We have already seen a proliferation of small, independent labels all doing things in a different way.

What I really think will explode is the whole area of apps. They were developed by Steve Jobs, but we have seen an explosion of individual artists creating their own apps. People seem to have a huge appetite for apps and consumers are pulling more and more data from them, That drives consumption for new technologies and drives the aggregate amount that people are spending on music.

These new technologies are helping bands to be more efficient in their interaction with fans, and it helps them to understand where their fan bases are. It also gives them immediate feedback.

LLB: So how do you know so much about this?

RH: In essence we are a venture capital firm, but we do things a little bit differently. We are not sector specific but we choose sectors to focus on for certain periods of time. During that time we partner up with industry experts – not the money men – who can inform us and help us to choose companies to invest in.

At the moment we are shinning the spotlight on the music industry. We think it’s an exciting area to move into because of the huge changes.  We have only been going for four years so essentially we are a start-up investing in start-ups.

LLB: Well thanks for your time Robert enjoy Internet Week!

RH: Will do!

Robert Higginson will be speaking at Investing In Music Technology at Hosptial Club, Covernt Garden, 18.30, 10 November

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