The music industry needs to find new revenue streams and is hoping open data might help to find them. But what does it mean for businesses to let their information be accessed by third parties while they create their own mash-ups? David Reed went to Music 4.5 to find out.
What does the data value exchange look like? A good example would be Last.fm, the music discovery service. Sign up and upload your personal playlists (or “scrobbles” as the company calls them) and in return get personalised recommendations and free access to them via its internet radio.
The business model is based on selling that information to music labels and artists who want to promote their events, gigs and recordings to the right audience. Not much different from hundreds of other social networks with the same approach. Except that Last.fm has operated an open data policy from the outset.
That makes it profoundly different since it allows third parties to develop services, just as it creates its own using the data freely provided by consumers. Remarkably, the service launched before the concept of big data had been dreamt up.
Choosing to create in this new environment, rather than using a conventional relational database, was a bold step. But as Woodhouse noted,
The principle of open data was also important.
With 75 billion scrobbles and 636 million tracks, it has unarguably been a success. But those founding principles have caused their own problems, not least the decision to be open data. For one thing, the company did not have the right controls in place to manage runaway demand for data from external developers.
As an open data source in a very popular sector, Last.fm was receiving thousands of calls on its servers by developers wanting to create new, related services. Meeting that demand required resources, both human and technical, which all come at a cost. So the business is working out what rules it should apply to ensure it can maintain its open data principles without having to keep an open chequebook to pay for them.
It is a dilemma which open data proponents need to be able to resolve to maintain momentum. The upside is to have service enhancements being developed which the business would never be able to afford to create in its own right. The downside is that these benefits are not always obvious at the outset.
He recognises that there is a “Jekyll and Hyde” opinion about open data in many organisations, not least because it is a disruptive force.
The music industry is struggling with the concept of open data as a value creator, having shown itself to be slow at adapting to rapid market changes. Historically, music labels based their business model on restricting supply and controlling distribution. Open data as a principle runs entirely counter to this view.
Responding to the challenge of open data will prove to be no easier for the music industry than digital distribution.
He recalled that in the early 1990s, labels feared that allowing online access to their music would lead to lost sales. Instead, restricting digital access did lose them sales, but chiefly as a result of piracy and peer-to-peer file sharing. Once access portals like iTunes became embedded in the same mobile devices used to play content, however, digital sales began to take off.
Changing a mindset based on closed systems to one accepting of openness will be no small task. Starks said:
Paul Gathercole has been looking at this issue as VP, digital tools, global, for Universal Music Group International. The guiding data principles within the business are to acquire, organise, use and learn.
Different parts of the business were looking for specific answers by drawing on such open data sources, building single-use APIs in order to generate a standalone report. Organising that into a coherent strategy was one of the challenges faced by the business, as was improving the quality of its own meta-data.
Being able to deliver dashboards to business users is one way in which data becomes visible and valuable in a company. For a music label, being able to correlate radio airplay against iTunes downloads is a useful marketing insight. But this also creates risks if those users are simply able to build their own reports. “It is easy to understand the wrong question. So we have been moving away from dashboards towards dialogue,” he said.
When a query is raised by a business user, the data analysts no longer simply build an API and dashboard to answer it. Instead, they will discuss why that individual wants a specific piece of information and whether there is another way to tackle that question. “That drives cultural change, although that is a slow game,” he admitted.
The way in which data insights are presented is also important to how they are adopted. “We’re a very visual industry. People tend to slice and dice by the impact findings make on screen. You have to remember that your data ends up on a big screen being discussed,” he said.
Gathercole has adopted a rapid prototype and testing process to allow data projects to remain achievable and to get to some value early on. This means that, “everything is a beta and it is not about having all the answers. It is just about having a better degree of data fluency. Too much is as bad as not enough”
While the answer to the open data issue has yet to be discovered, it does mean Universal Music is undergoing a cultural shift in readiness for the new environment. That includes changing its recruitment process to bring in data scientists who are comfortable with exploring data.
Somewhere in all of those data sources - both open and proprietary - could reside the next breakthrough idea for the music industry. They certainly hold a lot of potential value in terms of content which music lovers may pay a premium for. Last.fm has proven that aggregating data into a sum that is greater than the parts delivers a real reward. Others in the industry will start to explore their own options. Open data will be an unavoidable part of how that value gets realised, even if how that happens is not yet clear.
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