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The innovation driving investment opportunities in digital music

By 29 July 2021August 10th, 2021No Comments

With many people being predominantly home-based for the past 18 months, lots of us have turned towards digital forms of entertainment, whether that’s TV, games or music, as a form of enjoyment before things were opened up or as a way of unwinding. The BBC recently shared an article on the health benefits of AI music, with a spotlight on the company MediMusic, that use artificial intelligence to craft playlists suited to individual users in order to reduce anxiety and pain. MediMusic share on their website that when their solution was tested on dementia patients, they saw a reduction of up to 22% in their heart rate, and even suggest that the technology could help the NHS cut medical bills. It makes for interesting reading and opens up the conversation around the many applications of digital music.

However, you listen to music and whatever it to represents for you, there’s no doubting that it’s an industry that will exist – in whatever varying digital forms it takes in the future – forever. As part of the DCMS ‘Invest in Creative’ toolkit, we interviewed a host of leading figures operating in the UK’s digital music space to unpick where the areas of innovations are, what investors should look out for, how artists are utilising emerging solutions to gain greater autonomy over their careers, plus much more.


‘young entrepreneurs… will be very successful and you need to keep your eye out for who they are and where they are’


Whilst there’s key dominant players in the music industry, it’s often the young, fresh talent that are the source of innovation, shares Andy Heath CBE – Chairman, Beggars Music as part of his ‘Invest in Creative’ interview. The industry is ultimately commercially driven, however Andy frames it as a sector that allows individuals to express themselves artistically but in a commercial and entrepreneurial way. This has significance from an investment perspective, as it’s a reminder of the robust structures and commercial channels that are firmly established in the space. Continuing along a similar line of thinking, Andy shares: it’s the ‘young entrepreneurs who know how to do… and the ones who are doing it, who will be very successful and you need to keep your eye out for who they are and where they are. And when you find them, look after them’.

Another driver of innovation, outlined within a number of the interviews compromising the music module of the toolkit, is the pandemic itself and the ways that it’s shifted people’s relationship with music. Veteran record producer Ammo Talwar MBE, CEO, Punch Records, relays that he sees the two main opportunity areas to watch as: ‘how the consumer receives music and that live experience’, he continues ‘what the pandemic has done is it’s allowed us to feel and be closer to the music that we listen to. It’s allowed brain cells to reimagine, and really think about the music. Now, I think we want to experience it in the live’. Another point of consideration is not only what the gigs of the future will look like, and the vast appetite from consumers that exists there, but also how the virtual replacements will continue to evolve.


the two main opportunity areas are: ‘how the consumer receives music and that live experience’


The digital music space is especially diverse, which another of the interviewees, Zena White, Global Managing Director of Partisan Records, goes into considerable detail about in her interview. She points to online, direct-to-consumer sales as being an area of growth, given the rise in easy plug and play software like Shopify, the capabilities are growing. Artists can use an ever-growing number of platforms to both build and then monetize their community, whether that’s through premium offers relating to early access and merchandise on their website, or by using other platforms (such as bandcamp) that allow for this. The monetization of artist’s community is gaining momentum across the spectrum; SoundCloud have widened their money-making programme for paying artists and Instagram also have plans to help artists to move in this direction. With consumers wanting to gain a deeper connection to their favourite artists, as well as ensuring that they’re getting a fair deal, this is certainly a space to watch.

As well as the platforms, existing and emerging, that are focused on helping artists connect to their fans, Nikhil Shah, Co-founder of Mixcloud shares as part of his interview that there’s lots of emerging companies that have solutions to support novice musicians. He discusses companies that are involved in education, learning instruments, learning music tech, learning how to produce, record etc.

This is a rich and diverse space, whether you’ve considered it from an investment perspective before or not, the interviewees included in the music module paint an in-depth picture of what to look out for: specific trends and the types of companies or artists to watch out for. Access the music module and the wider DCMS ‘Invest in Creative’ toolkit for further information on this dynamic subsector of the creative industries.