Audio Collaborative - Reniassance to Evolution

Futuresource Event Highlights




30 Nov 2016 - Futuresource Consulting would like to share some of the latest industry insights from the Audio Collaborative event, the third in a series of entertainment technology conferences, bringing together leading experts from the entire audio and music sector. This year's autumnal event at the stunning Ham Yard Hotel, London, was sponsored by THX and Frontier Silicon.

The order of the day consisted of a keynote address by Harman International, together with 6 panel sessions and presentations delivered by key industry influencers from organisations such as; Bowers & Wilkins, Entertainment Retailers Association (ERA), Folder Media, Frontier Silicon, Google, Harman, Jabra, Jukedeck, Kodak, Kilimanjaro Live/Free Focus, Music Group, REWIND, Sonos, Onkyo, MelodyVR, Warner Music and 7digital. All of the collaborators shared their expertise and ideas surrounding product innovation, market visions and experiences, highlighting just how the industry can sustain growth and drive profitability, connecting the gaps between changing consumer needs, industry desires and future innovations.

Armin Prommersberger, Senior Vice President, Technology, Lifestyle Audio Division at Harman International, took the mantel of keynote speaker at the conference, setting the scene for the day, emphasising how the audio business as we've known it over the past 50 to 60 years is changing at an unprecedented speed. "The whole value chain is going through a tectonic shift, not just for audio equipment manufacturers but also for musicians, content producers, record labels as well as consumers.

Prommersberger continued, "The audio business is no longer about the traditional value chain. It is about networks, neuro networks and participation and collaboration within this network is critical to business success. The possibilities are overwhelming."

The self-confessed audiophile quipped about how the key to remaining relevant in this networked world of audio was not just about high-resolution sound but 'mono' speakers and smart audio. It's essential to recognise this in order to survive in the audio entertainment market place."

Simon Bryant, Associate Director of Consumer Electronics at Futuresource Consulting opened the first panel of the day by introducing the darling of consumer electronics (CE), the headphone market. Bryant kicked off the conversation by highlighting that, "60% of the revenue in the headphone market is from 3 brands and this market is getting more complicated with lots of other brands moving into it." The panellists that joined Bryant on the headphone panel had been integral in developing flagship brands like B&W, Beats By Dre and Jabra. The discussion explored the importance of fashion, design and technology. Growing use cases and multiple ownership were highlighted as exciting opportunities in this market, as brands could cater to different life styles and listening scenarios - in the home, on the commute and in the gym.

Suzaan Sauerman, ex-Global Senior Director, Consumer Marketing at Jabra shared her experience of developing the Jabra headphone brand, taking it from a white labelling B2B service, for companies like Nokia and Motorola, to becoming a consumer brand in its own right and going on to collaborate with health insurance companies. "When did you imagine an insurance company and a brand like Jabra working together? Of course, because it makes sense. You get your heart rate monitored; the insurance company gets data from you, give you discounts and advice. It just shows you the collaborations out there and as Armin stated we cannot win in this space without partnerships and collaboration and this is the future for the headphone market."

Dany Atkins, who worked on the initial launch of Beats by Dre, stressed the importance of collaboration in the design sense working with fashion designers like Alexander Wang or brands like Hello Kitty, to create fashion statements rather than just products. An example of this was the special range of 34c gold Beats By Dre headphones, manufactured especially for the winning World Cup team in 2014. Atkins commented on the importance of relevance in brand match-making underlining, "It's important that you understand your brand and the people that you are talking to. If you do so in an authentic and credible way, then you create true partnerships and true collaborations, not just a brand slap, which is not very effective for anyone."

The radio station's view on audio and collaboration was brought to life by Matt Deegan, Creative Director at Folder Media who provided interesting case studies around how the brands, artists and personalities within the neuro network discussed by Harman participate through content creation across different platforms.

David Sidebottom, Principal Analyst at Futuresource Consulting then took to the podium to share the Futuresource view on the opportunities in the audio landscape looking at the size of the global audio market and how it has developed over the past 10 to 15 years. Sidebottom stated that, "US$30.5 billion was spent this year, some of the big trends within that including headphones and wireless speakers, with 60 % growth since 2010. A doubling of that market over the last 10 years with a further 7% growth this year."

Sidebottom then explored the traditional music market and highlighted that, "Consumer spend is expected to total US$20.5 billion worldwide in 2016, even though this market has seen challenges, not showing growth since 2010 y-o-y. This year, Futuresource expects to see 8% growth in the global music market and a great deal of this growth will come from the adoption of music streaming in the mass market." Futuresource did not include live, radio or royalty-based business models in this, sharing that this market feeds into a US$100 billion plus market alone.

Matt Deegan moderated the 'What Does the Music Fan Really Want?' panel were a stellar line up of music business executives, from the Entertainment Retailers Association (ERA), Kilimanjaro Live, 7digital and Warner Music discussed how music service providers could create additional value across the chain.

Kim Bailey, CEO at ERA stated that, "more than a third of revenue still comes from CD, with about a third from streaming and the other from vinyl together with downloads." Bailey highlighted the importance of customer centricity, delivering customer value and not playing into a format war, delivering music when and how the customer wants to listen to it. "One size does not fit all, customers want music immediately, some buy multiple formats, and some buy none."

Mark Walker, Talent Manager at Kilimanjaro Live shared his experience about the growth of the more contemporary, digital talent that utilises platforms like YouTube to raise their profile. Each YouTuber creates their own shows, building an organic digital following, without the big bucks of the record label. Whilst Walker promoted concerts he recognised that there was a whole untapped talent pool of YouTubers that had built significant fan basses through social media. "'The Summer in the City' series in London, started as a meet up in a park of 3000 fans, moving on to an in-door venue at Alexander Palace, selling 7000 tickets, it was like Beatle Mania. The beauty of this is that it affords talent like Emma Blackery to branch out and get the word out there, but also fund what they are doing."

Hemal Shah, Worldwide Business Lead, Google Home and Living Partnerships discussed the role voice plays in the home starting with an example of an early 1920s application of voice-activated technology, Radio Rex, which despite being innovative had its issues as it only worked with 500 herz acoustic energy, the voice of a middle-aged adult male. Shah went on further to highlight the advances in machine learning, artificial intelligence and computing power discussing how this created the perfect eco-system in which a new paradigm of interaction with devices will begin to thrive.

"We have seen an evolution of user interfaces. We have gone from punch card, keyboards, to mice, to touch. So is voice the next user interface (UI) paradigm?" To address this question Shah highlighted two key UI terms; cognition and cognitive load. "Cognition refers to the ability of human beings to process information, which involves a lot of different skills, everything from attention, perception, pattern matching, language recognition and decision-making. Cognitive load is the amount of energy and mental resources it takes to process this information. So why is voice suddenly so in vogue? It is pretty simple. One of the first things we do as children is talk so all of the cognition capabilities discussed are what we have learnt and mastered over the course of our lives. It is almost a natural predilection to revert to voice as it is so data dense and precise."

Shah finished by stating that, "Home systems should connect users to what they care about, as they want access to a proliferation of information and to get things done. Voice and AI are in a very infant stage, like little babies they are going to stumble they are going to fall, but they are here to stay."

Next up was the 'Evolution of Home Audio' panel session. Jack Wetherill of Futuresource, emphasised the evolution of home audio by inviting the panel, leading executives from Frontier Silicon, Sonos, Onkyo/Pioneer and Google, to share their first memory of audio in the home.

From a professional point of view, Vincent Sorge–Titmus of Sonos talked about the early years and shared his experience 7 years ago at Sonos, reflecting on how the channel education requirements had shifted. It was about driving consumer awareness and understanding the opportunities the internet created for the home audio experience, explaining the benefits of wireless. Sorge–Titmus emphasised that, "We were now hitting another major milestone in home audio evolution and it is now about voice and the opportunities that it could bring to the consumer's life."

The panel quickly moved on to explore 'The Evolution of Home Audio – where next for the category' with a focus on the role of voice personal assistants for the next generation of audio listeners. The panel shared their thoughts on voice assistant tech and the potential opportunities for home audio. There was no denying across the panel that the role of voice and its integration into the music eco-systems in the home would be a relatively easy concept to realise and implement, especially given the expected growth in connected audio speakers, overall home connectivity and anticipated growth in streaming music subscriptions.

Sorge-Titmus of Sonos commented that, "Voice is still relatively new. Amazon Echo launched less than a year ago and a lot of CE manufacturers probably thought wow that was not on our roadmap or vision and what you see today is that voice is going to accelerate the way people experience different devices at home. But what will the platform be? Voice and the way it operates with music will certainly be key, but how do all of the other devices operate with each other? We can see a platform race, but there are a lot of challenges, integrating voice is by far easier for people sitting out of the platform but how do you do that? Who do you partner with as you have Google, Alexa and other new entrant partners that today we do not truly know."

Anthony Sethill, Founder and CEO of Frontier Silicon, commented, "I think where voice goes even further is through the vision of the market-makers like Amazon and Google and how it fits in with their big global strategic plans. For Amazon, it is about shopping, for Google, it's search and connecting these devices to the cloud and connecting them to the home. What I can see so far is the awareness and the interest in these technologies and products is far greater in the US than in Europe. I think we are probably lagging a few years behind here. What you are seeing in the US now is people buying smart curtain closers over slats, lights, all sorts of devices and the easiest way of controlling these is through voice. One dimension is easy access to streaming music or creating shopping lists and the other is about controlling the smart home. In a nutshell, I think it is probably the most dramatic thing that has happened in the home audio market since I can remember."

The penultimate session was the 'VR 2016 and Beyond' panel. REWIND, MelodyVR and Music Group joined Futuresource to discuss how music relates to virtual reality (VR), augmented reality (AR) and mixed reality (MR) touching on available markets, how consumer trends are changing with the technology, together with new opportunities. Darrel Atkins, Creative Director of REWIND shared his thoughts about the conference at the post show networking event. "It was really interesting to talk with the other panellists and speakers about their take on VR, AR and MR from different industry stand points, where future technology is really changing the way consumers interact with music."

The final presentation of the Audio Collaborative Conference was delivered by Patrick Stobbs, Co-Founder of Jukedeck. This innovation showcase was about an artificially intelligent music composer, software that creates music, note-by-note, completely by scratch with no human intervention necessarily required. Stobbs demonstrated a few tracks showing how machine learning composes music and how it improves over time. This tool enables video, games and theatrical producers to create unique, completely royalty-free tracks in seconds.

Attendees included; 24-7 Entertainment, 7digital, Abbey Road Studios, Accenture, Amazon, Armour Home, Armstrong, Audio Engineering Society, Audiogum, B&O Play, Bandcamp, Bang & Olufsen, Bose, B&W, BPI, Captivate VR, Digital TV Group, Dixons Carphone Group, DTS, Dynaudio, Eastman Kodak, ERA (Entertainment Retailers Association), ERT Group, Frontier Silicon, Google, Gracenote, Harman, Harper Collins, Harvard International, Hasbro, House of Marley, ICEPower, Igloo Audio, Innovelec Solutions Ltd, Jabra, Jamspot, John Lewis, Jukedeck, Maplin Electronics, MelodyVR, MPO UK LTD, MQA, Music Group, Naim Audio, NCB, Oxford Digital, Pioneer & Onkyo, PRS for Music, Qualcomm, Samsung Electronics, Sennheiser, Sonos, Sony Music Entertainment, Spotify, Strax, Stream, The state51,THX,TIVO, Vogel's Products, Warner Music, Yamaha and many more.

Notes
Futuresource Consulting is a specialist research and knowledge-based consulting company, providing organisations with insight into consumer electronics, digital imaging, entertainment media, broadcast, storage media, education technology and IT. With a heritage stretching back to the 1980s, the company delivers in-depth analysis and forecasts on a global scale, advising on strategic positioning, market trends, competitive forces and technological developments. www.futuresource-consulting.com

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