The music industry had a wild ride in 2010. Companies came and went, layoffs hit every sector, rapid growth delivered opportunity, and Spotify still didn’t launch in the U.S. This year, 2011, should be no different.

Here are some predictions and thoughts about what 2011 may hold for the music industry.

1. A Major Label Shakeup

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Despite all the talk about the major label system collapsing at any moment, it doesn’t seem likely. However, 2011 may finally see a restructuring of assets and brands. EMI has no shortage of financial issues, and the current discussion points to Terra Firma handing them over to Citigroup in the near future. The big assumption is that EMI will be broken up and sold in pieces to the other three majors (Universal, Sony and Warner Bros). Of particular value is EMI’s publishing division, and if the piecemeal sale does happen, there may be a fight for this asset. Of course, the other three majors aren’t having the smoothest time with cash-flow either, so it remains unclear exactly who can buy what. At minimum, EMI will not look the same at the end of 2011 as it does now.

2. Indie Label Opportunity Grows

All music companies will be focused on streamlining their efforts in 2011. This involves smarter processes, innovative policies, and keeping overhead low. Independent labels typically have had to function with these elements in place from day one; their ability to stay nimble will allow for continued growth opportunity. As business partnerships continue to solidify between content owners and brands, smaller labels will be able to adapt quickly and profit at lower revenue thresholds. This creates a strategic advantage that, if managed properly, will see upward trends on indie label balance sheets.

3. Streaming Services Reach Critical Mass

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In 2011, someone will become the Apple of streaming — perhaps Apple itself. Consumers are getting closer and closer to accepting renting over owning content. Companies such as MOG, Rdio, Spotify, and Rhapsody are poised to capitalize on this. With good timing, savvy marketing, and clear messaging that succinctly communicates the benefits, a streaming music provider can easily take the leading role in this race. The safe money seems to be on Apple (in part thanks to the Lala acquisition), but the other contenders are quite serious and finding the level of funding necessary to compete. This sector is also making major moves into mobile and car audio; these additional distribution avenues only strengthen the push toward widespread adoption.

4. Free Continues Moving Upwards

“Free” has been a highly debated concept. One side states that the awareness and data capture free provides can be converted to sales over time. The opposition feels that free devalues content and sets the wrong precedent. The truth may lie somewhere in the middle, but it is clear that with the volume of free content (legal and otherwise) one has to be giving something away simply to stay competitive. This line of thinking is nothing new, but it has finally permeated the companies and artists at the top. The majors and superstars have relaxed their policies on free (especially when paired with data capture) and that trend will continue. This will happen in parallel with efforts to find techniques to convert free to paying — a critical element to make this model work.

5. The Essential Toolkit Solidifies

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Digital marketers have an almost endless supply of new technology and techniques to try. However, over the past 18 months, many have faded away or a best-of-breed front-runner has emerged. In 2011 we will see this continue as it becomes more clear which technologies and techniques provide real value. In 2010, it became easy (and essential) to track true performance metrics; marketers now have multiple tools to evaluate effectiveness based on conversion, data capture, sentiment, and engagement. This analysis is helping define where to focus efforts — and that is helping digital music marketing become a more precise practice.

Companies with momentum in the digital marketing toolkit space include Topspin, Bandcamp, Nimbit, Rockdex, NextBigSound, Rootmusic, SoundCloud, Buzzdeck, Artistdata, Mozes, and the ever-essential Google Analytics. Let’s also not forget the mainstays — Twitter, Facebook, and email-marketing platforms such as ExactTarget, Mailchimp and Constant Contact.

6. The Net Neutrality Debate Continues

The positions and arguments haven’t changed much, but the Net neutrality discussion (particularly at the government level) has accelerated. In late December, the FCC approved rules that enable mobile carriers to regulate application use. Many members of Congress have already stated they will fight this by creating a new law. This debate is still far from over; expect heated discussion all year long.

In many ways 2011 won’t look much different than 2010. The music industry is still suffering from steep declines and is still building strategies and systems to counteract this. The key words moving forward are innovation and experimentation; most people have accepted the fact that we cannot force consumers to behave as they did in the past. Instead, we must seek to better understand our audience, foster stronger communication, and be willing to take leaps of faith on a regular basis.

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What predictions do you have for the music industry in 2011? Please share them in the comments.

Jason Feinberg is vice president, direct to consumer marketing for Concord Music Group. He is responsible for digital and physical direct-to-fan solutions for CMG’s frontline and catalog including the Rounder, Fantasy and Stax labels. Recent campaigns include Paul Simon, Allison Krauss, Paul McCartney, Elvis Costello, Carole King/James Taylor, and Crowded House. Follow Jason on Twitter @otmg

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