There is an emerging creative destructive transformation of the music industry pulling power away from incumbent gatekeepers and empowering independent contributors who have unlimited freedom to express themselves to a global audience worldwide. The digital-first music landscape focus more on audio/visual music streaming and transforming the listening area into a third-space experiential setting. 

Let’s discuss the background, the technological shift, the players and the strategies involved in this new paradigm. 

The Advent of Chillhop

Chill-hop is a Japanese underground hip-hop genre derived from the Jazz-hop style of 1990s artists from Guru, Pete Rock and CL Smooth, Digable Planets and Tribe Called Quest. While many of the Tokyo hip-hop heads didn’t understood the lyrics, they loved the melancholic flow of the jazz beats fused with hip-hop and a subculture emerged in underground Tokyo for dope jazz samples fused with hip-hop beats to create a relaxing chillout experience. Beat producing was still big in American hip-hop scene but the focus shifted to breakbeat and drum and bass while Tokyo stayed true to jazz-hop and chillout. 

One of the bigget pioneers in Tokyo was Nujabes who fused hip-hop street art with jazz-hop tracks. The biggest break was when the Japanese anime Samurai Champloo was released to a worldwide audience featuring the works of artists like Nujabes and Fat Jon for the world to take notice of Japan hip-hop scene staying true to original genres like jazz hop. 

Today, many of the underground artist gravitated to platforms such as SoundCloud and YouTube to showcase their works and get notice. While SoundCloud was great for artists, YouTube has a powerful platform due to the monetization model. Once YouTube increased the amount of playback time for videos, the market opportunity to provide on-demand streaming and live-streaming programming was now in full swing for chillout genres such as study-hop and lofi style of jazz-hop. 

Experiential Screen Streaming

The emergence of a digital streaming platform artist through screen-based devices created a new dynamic – video augmented experience. Due to popularity and growth of gaming channels which use video capture technology to live stream or record gameplay while providing audio narration, underground music artists and underground scene talent started using the technology to create visual experiences to support the tracks they were streaming on platforms such as YouTube and SoundCloud. 

The introduction of experiential screen streaming changed the game and playing field to an entire new dimension. Listeners at home who moved away from hi-fi stereo component systems can now leverage their large flat-screen television and video speaker systems to stream long-format chillout genres to create a relaxing experience. 

We are expecting the screen streaming experience to quickly leave the household environment and take hold into commercial establishments such as barbershop, salons, lounges and other third-space establishments to provide a level of experiential entertainment to their patrons. This would be very disruptive to background music service providers who currently provide “elevator music” for retailers and corporate settings. 

Digital-First Music Entities

While the current ecosystem of the emerging digital-first music scene is pretty much developing, we are expecting the structuring of the scene to be similar to the 1970s glory days of labels, artists, promoters and visual artists working with a level of freedom and independent of corporate-based contracts. 

Streaming Channels. These entities is the next generation radio stations and will setup a space on YouTube and SoundCloud to broadcast music and establish the visuals and tone of the station. These stations are using traditional game recording software from Open Broadcast Software (OBS) and open-source media players that can be customized with plugins to provide music visualization effects.  

Music Artist. These are the creatives that make the beats to provide to a streaming channel for airplay and recognition. Currently these artists provide beats for free for hopes of recognition and have to compete in a crowded space with other artists for playtime and exposure. 

Visual Artist. These are the artists who create the artwork. Most of the artists are experts and professionals working in Tokyo but more and more artists are finding the digital-first music space a new channel to be recognized for their artwork. Most artwork does not have to be a drawing but can be a real-world photo to reflect a mood or state of being, making the visual artist the most critical element to creating a digital first experience to attract and retain viewers.  

Label/Agency. Once music artists and visual artists start realizing they want to get paid for their works and other people are using their tracks without their permission, the need for a label/agency arise to manage the distribution of creative works. Labels and agencies sign artists for the right to represent and distribute their music to the hundreds of streaming stations and work out a deal to receive payment to pass on to the creatives in question. 

Challenges and Opportunities

As the digital-first music scene take more shape, there will be a need to address the challenges as well as create new opportunities. Here are some of the top challenges and opportunities we observed. 

Rights Management. There is no current rights management system in play where an artist has control of when and where their creative works are played or displayed. There is the possibility of creating a crowdsourced distributed ledger system where fans can check if a track or artwork is permitted to be used by a streaming station they are listening to. This is an opportunity that can be explored to handle rights management. 

Revenue Pipeline. There is no current revenue pipeline to ensure when a creative work is used by a streaming station that royalties of licensing fees are distributed in a timely manner according to agreed terms. The role of a label/agency is to set the terms upfront with a streaming station on full disclosure with subpoena rights of their earnings from YouTube and Soundcloud and how much revenue they generated and agreed terms on how much will go to the label-represented artist. 

Third Space Augmentation.  A new opportunity for third spaces from coffee shops, private libraries, barbershops and other waiting areas considered third space (the space outside of work and home) is emerging where licensing agreements can be form streaming stations to offer broadcast rights. In addition, there is a possibility for on-demand streaming for commercial establishments such as a party or wedding event to stream a two-hour streaming station after telling the awful wedding DJ to go home. 

An Awesome New Paradigm

There is nothing more beautiful in this world than total creative destruction of the status quo and the corporate music industry deserve the fallout of planned obsolesces more than anybody. 

As the digital-first economy takes off, so will the digital-first music industry and new opportunities will be available for those who are on top of the scene and the game. Even though the scene started off with chillhop, there are an unlimited of new genres that can take advantage of the digital first music ecosystem from Caribbean soca music to urban house music.   

As more and more new entrants enter the digital-first music industry, we recommend you look at the big picture of establishing ground game for making sure artists are getting paid for their works and not exploited by streaming stations. Also look at ways to create on-demand and live-streaming delivery as well as licensing to give homes and establishments new options for media consumptions creating new streams of revenue. 

There is so much opportunity and freedom in this new paradigm, it would be foolhardy not to jump in now while the market is still growing and developing worldwide.