Live from SXSW. Day 2. The question about data nobody asked

In his second guest posting from the SXSW conference in Texas, Sound Alliance commercial director Ben Shepherd talks about the big question that nobody asked.  

The last day of the Interactive component of SXSW seemed to kick off relatively slowly. The hallways around Austin Convention Centre werent as frantic as the previous days maybe it was due to the parties that happened last night and a few bleary eyes.

A full day was ahead of me, my first stop was the panel ‘Is too much math killing marketing?’. Short answer possibly.

One thing I’ve noticed about SXSW is despite its fanboy digital overtones, most attendees seem to have a sense of self awareness around things they havent solved yet. One of those things is data ie, the right data. Collation is one thing, analysis (ie real analysis) is another thing. A common theme of many panels today was around the issue that a lot of the data we collect now is of no value or use. The notion of marketing being a mix of magic and logic seems lost on some attendees.

Come midday, the place was buzzing. Packed to the brim.

At the panel ‘Playlists, Networks, Radio and Numbers you need’, the data issue was again brought up. Panelist Corey Denis pointed out that around music, internet radio and playlist stations are failing to deliver the industry with information that provides them with real value ie info that helps sell records and route tours.

Enough with the data she pleaded, it is not enhancing the experience right now.

You could sense that the coders/engineers in the audience were listening to her plea and working out a way to deliver the right numbers. In some ways, I always thought Next Big Sound kind of did this.

The big question that admittedly no one asked (including me) was how much is the recording industry prepared to pay for this data? This is the key issue – the data exists but compiling and analyzing costs money and time the record industry is generally one that exists on limited marketing budgets. So do they have the money, a fair amount of money, to pay for the info and do they have the talent in house to make sense of the numbers?

Daniel Ek stepped up for the main keynote at 2pm, interviewed by Wired’s Elliot Van Buskirk. Proceedings seemed to go far more smoothly than yesterday’s keynote from Twitter’s Evan Williams, however the attendance was down a good 40%.

First up, Ek didnt divulge any details around a US Spotify launch. From the sounds of things its not going to be easy. He commented that for the service to launch theres 5,000 odd publishers to gain clearance from. He did mention that in the 6 EU nations the service is active in that they have over 7m total users, and 320,000 paying users.

I did some quick math and it means approximately 4% of all users are free paying, which would deliver Spotify around $38m Euro in yearly revenue. Not bad but what are the operating expenses?

Mobile appears to be the killer app for Spotify. Ek demoed it using an Android powered Sony Ericsson X10 and it was elegant. The crowd applauded loudly. Interestingly, about 40% of the audience claimed to be Spotify users despite the fact access outside of six countries is illegal.

For me, Spotify appears to be an obvious acquisition for Google. Why? It works across platforms – mobile, desktop, home entertainment centre. It has an advanced search functionality. Technically its sophisticated. Revenue wise it has potential. And legally it would benefit greatly from becoming part of a similarly wired company which could deliver efficiency around process (such as licencing, distribution etc). On its own, it seems doubtful Spotify can realise its potential, especially in the US. In contrast to Evan Williams, Ek is under no illusion that he is some sort of agent of cultural change. He wants Spotify to work commercially. “This has to be sustainable.”

Ian Hogarth from Songkick presented an excellent panel around ‘How the Internet is changing the dynamics of the concert industry’. He presented some compelling information around the revenue dynamic of the wider music industry showing that live performance revenue has gone from less than 25% in 2004 to more than 50% in 2009. Of that revenue, only 55% comes from Top 100 acts (compared with 90% of live performance revenue in 1990).

Music begins tomorrow. Overheard today: The digital nerds are being replaced in the foyers by sad looking indie kids.

• Ben Shepherd blogs at Talking Digital