The first article in this two-part series, titled Why Market Validation Is Crucial for Record Companies, focused on challenges for music professionals, in an industry left rattled by technological change. Budgetary reductions, redundancies, power shifts, and unreliable metrics, are all new-age industry issues, caused directly by the process of digitalization.

This follow up piece explores the specific benefits of using analytics and testing within the music industry. The traditional evaluative practices for music are assessed, along with the ability of market testing to define clear consumer markets, facilitate more effective data management and reduce the influence of bias. It is concluded by an exploration of the NoticeSound software and how this can be used to improve the success of music track releases.

Traditional Evaluation

‘Great artistry thrives on innovation, and innovation is often built on the back of information’ - Brad Huegan [1]

The major criticism of the music industry during the digital revolution has always been that it was too slow to react to change [2]. It’s now important that the music business takes lead from other industries that are thriving in this climate and uses the available data to drive business proactively, rather than reactively.

Speak with A&Rs and it is soon apparent that they typically share the same criterion for evaluating music, as well as for the artists that are making it. While the criteria used are, of course, still important in today’s industry - they are often loose, unmeasured and prone to bias.

By harnessing the power of data, professionals are now able to fine tune each of these criteria. The below highlights some of the key evaluative tools used by today’s label staff, and then explains how these can be enhanced by the use of market research and validation.

Label Colleagues

Across any industry, it is common practice for financial decisions to be made, at least partially, on the basis of internal conversation and debate. In the music business, decisions on artist investment are also made in this way, and often draw on opinion from other A&R staff and label-mates from different departments, as well as directors and more senior management. Evaluative decisions of this kind are also made in consideration of the wider company approach, such as financial resource and genre-focus.

A&R Scout Sources

While some scouts are contracted employees of record companies, many are unpaid interns or unofficial sources. These are people with their ears to the street and who are fully immersed in the world of new music, such as bloggers and event managers. In fact, there is perhaps no better informal soundboard for insight than consumer information itself, which is the most likely to be reflective of listening and purchase habits.

Own Instinct

How much of an artist signing is based upon feeling, is not to be underappreciated. Within the music industry there remains a palpable sense of pride regarding the creativity at the heart of the work, despite the obvious corporate agendas. As such, the influence of ‘gut instinct’ is often cited in interviews with A&R staff, as being one with real power.

Industry Data

While it is fair to say that the comprehensive use of big data within record companies is lacking, it would be amiss to ignore that forms of data are routinely used in decision-making. Social media metrics for example, are widely used to make assessment about current performance and fan engagement. However, as well as being unreliable (as explored in part 1), these metrics can only provide limited insights.

Market Testing Helps The Evaluative Process

The process of music testing can refine each of the above measures for evaluating artists, and is able to provide more data-driven conclusions and give validation to decisions. The use of testing and measured evaluation can be particularly helpful when it comes to gauging the opinion of colleagues and A&R scouts. Using a measured tool for this purpose allows faster, larger, and more controlled, samples. This data backing can then help reduce an over-reliance on creative instinct, particularly in high-value cases. This is a particularly important factor when you consider that only between 5-10% of label music is profitable (Maggie Lange, Berklee College of Music [3]) and that A&R jobs and careers can hang within the balance of this.

Proactive Analysis

While music analysis is evidently helpful in its ability to enhance existing practices of music evaluation, the benefits also extend to proactive analysis that has not been utilised in the industry until much more recently. A few of these benefits are explored below.

1. Defining a Clear Target Market

Modern testing methods allow users to find, and test music within, a clear target market of end-users or consumers. The result of this enhanced focus is a data set that only pertains to the market of your interest.

Music analytics has now evolved to a stage where it can generate detailed data, capable of assessing the likes and dislikes of content, based upon factors including age, location and genre preferences. Importantly, this testing is able to go beyond the level of retrospective analysis (such as purchase decisions), and test preferences in a way that makes it an effective predictor of future performance.

The value of such techniques becomes clear when we consider the differences in music consumption across cultures. For example China is an upcoming, and potentially very lucrative market for western music. However, there are key differences in how different tiers of this population engage with music. Indeed, Nielson’s 2016 360 Music China Report [4] noted that income level plays a huge role in music listening within the Chinese market. Moreover, for the more affluent Chinese consumers, live music is more important than it is for consumers in the US.

For record companies looking to explore new markets, testing and analysis is now able to provide insight into these demographics, in a way previously infeasible. Ultimately, the use of such techniques offers a reduction in risk for financial investments and a heightened understanding of market interest.

2. More Effective Screening

Music testing and analytics can also increase the chance of record company success by providing a tool that sharpens the process of talent screening, which is much needed in the digital age.

During an interview with Mix Energy [5], Mike McCready of Music X-ray noted that not only is there now increased accessibility to music from a consumer perspective, but it is also much easier for artists to make music than it ever has been. Indeed, for genres such as EDM and hip-hop, which often require minimal equipment, this is particularly notable. In fact there are numerous case-studies of unpolished, bedroom music making it to the charts, and tracks made in thirty minutes on an old version of Fruity Loops, becoming a smash hit.

While this transformation is positive for both creators and consumers, it means company staff such as A&Rs are inundated with new music in an unprecedented way. If these same individuals are also reliant upon outdated management systems, it is inevitable that good music is missed. Every A&R has a story of the one artist that slipped through their fingers.

Market validation tools are able to remedy this, by providing insight into huge volumes of music and indicating those most likely to be successful. By assigning value to music in this way, managerial decisions become much simpler and you greatly reduce the chances of missing talent. Professionals are instead then able to make their creative risk-decisions from a smaller pool, which is already proven to have potential in the market.

3. Reduce Bias of Social Influence

Music testing and analytics is also able to reduce the unpredictability of success that is created by social influence. Artist popularity is, at least in part, determined by social influence [6] and has been demonstrated to boost likeability of music [7]. However, for any artist, the degree to which their social influence will boost the success of their music is difficult to measure. As it becomes difficult to measure the music objectively, it is hard to establish, for example, how music from an artist with a large social influence, would be received in colder markets, with less influence.

This is particularly problematic when we consider the rise of YouTube sensations, as well as the value of digital advertising and social influence. For many, there are more reasons than ever to manufacture social data to boost brand identity. The ease with which people are able to generate false views and likes, means these metrics are often unreliable.

As new forms of music testing and analytics are able to remove the influence of an artist’s social presence - by exposure to specific test pools and withholding artist/song details - they allow music judgement on a much more objective basis. The end result is a more reliable metric for consumer feedback.

Secondly to this, music testing is able to limit internal human bias at the level of the record label. Research has shown that experts routinely fail to predict success despite their knowledge and expertise of a field [8]. These same individuals are also likely to overestimate their predictive abilities. By utilizing new validation technologies you can reduce this unconscious bias and provide a studied rationale for decisions to be based upon.

Closing Remarks

Since the digital revolution began, the music industry has long been playing catch-up and trying to find ways to adapt to the new world. However, new technologies in market research and testing are able to provide data to assist professionals in making proactive decisions. Ultimately, these can be used to increase success of music pushed to market. For those employed in the music business it is essential that such methods be utilised. Only then can the industry begin to act upon that information gifted by big data and not just react to it.