The Age of MatheMagic - How Big Data is Changing the Music Business

Abstract: Technological advances have enabled marketing practitioners in the music industry to see more in-depth and real-time images of the market than ever before. Some music companies have harnessed this plethora of big data and have been able to deliver remarkably good results. However, big-data's effect on the music industry has not yet received much attention from the academic world. This explorative, qualitative study examines just that, through looking at 1. How these new images of the market have changed impacted marketing practices at a record label such as Universal Music. 2. How this has impacted organizational learning in a record label and how it gathers and acts on feedback, and 3. How these feedback loops and user data affect the market orientation of the company. After in-depth interviews and three case studies, our findings indicate that these richer and more up-to-date representations of the market lead to record labels being able to correlate user psychographics to music preferences, they lead to consolidation of power towards larger labels, and they lead to ease of finding new niches and sub-genres for artists to find fans within. We found that the feedback loops we studied have gotten progressively tighter and shorter, with information systems being able to produce much faster valid data for decision makers to act upon. Thirdly, we found that as a result of increased capacity to gather market intelligence and respond to it, Universal Music became much more market oriented as a company. This has some very interesting implications both for theory and practice. For example, we saw that the temporality of feedback loops is an overarching factor across all our big-data research. Due to this, companies such as Universal Music are able to be much more explorative in their practices, and are able to mitigate risks in new ways.