Electronic music experts reveal 4 essential factors on AI-tech adoption for SMEs

July 8, 2020

We are excited to publish a recent study by Laura Callegaro, a master researcher from the Berlin School of Economics and Law, a longtime electronic music expert and co-founder of the Berlin-based techno label JTseries.

In this guest article, Laura shares 4 essential factors on adoption of AI solutions within the industry based on her research.

Originally written by Laura Callegaro

In electronic music, original scenes are challenged as some small-scale events burgeon into festivals, as market growth and fan-bases develop, DJ cultures become celebrity cultures – with luxury brands like Porsche signing up female Djs – and as electronic music events become cultural experiences. For a market that has quickly turned from niche to mainstream, it may not be a surprise to see that the week’s top 100 most played Spotify tracks are almost entirely dominated by electronic music production.

A recent survey presented at the International Music Summit in 2019, ranks electronic music as the World’s 3rd most popular genre with an estimated 1.5 billion people typically listening to it.

Source: IFPI Music Consumer Insight Report 2018

“The introduction of mature AI allows creatives and corporations alike to reimagine the creative process.”

This snapshot of contemporary popularity works just as another clear indicator of a new mainstream – in which electronic music has become more central – within the global popular music market. AI is having a significant impact on those roles that are currently most systematic and routine in nature: search, audit and elements of due diligence. The introduction of mature AI allows creatives and corporations alike to reimagine the creative process, target new fans, and identify the next set of musical stars with greater accuracy and precision than we ever imagined.

The research highlights the challenges and opportunities induced by AI in this booming industry, and it focuses on the “What and Why” of SMEs managerial processes under a new edge. Many academic studies have analyzed the cultural, political and social dynamics of this field, but very few have analyzed the economics of this industry. Through semi-structured interviews of both actors – providers and users of AI music marketing tools – combined with qualitative research of primary data, the study relies on the so-called TOE framework. This is one of the most insightful for IT and system adoption research and it helps to identify the different factors of adoption into three dimensions of enterprise context: technological, organizational and environmental.

FACTOR 01: Trust the machine

From the data analyzed, It has been demonstrated that there is overall trust in AI systems – 90% of positive sentiment – which are perceived as free of bias. In fact, just one out of 4 users pointed out that these machines are programmed by humans, and therefore it is impossible to have AI 100% free of bias: matter unfortunately already proved by facts. In relation with the research done, this important factor shows the essential need of a tight collaboration between humans and AI powered machines, which allow us to perform ingenious results by analyzing infinite numbers of data in a matter of seconds.

It’s essential that humans and AI-powered machines collaborate.

FACTOR 02: Agility wins

Firm size divided the respondents’ opinion widely. The variance between the answers was based mainly on the agility of the decision making process and financial resources of the organization analyzed. A common idea among all the interviewees is that the failure of new technology would have less impact on larger firms, which normally are the ones with larger financial resources. On the other side, 50% of them recognized that agility of smaller companies simplifies the adoption process and makes it more efficient.

Based on the findings, it can be argued that technical skills and financial resources are connected. We can also notice a variation between the replies considering the role played by financial resources, where the responses were heavily dependent on the cost of the exact system the respondents had operated with.

Agility fosters efficiency

FACTOR 03 – Tech-savviness is not key

Technical skills and financial resources in organizational context are strictly connected and in the adoption phase they can sometimes turn into constraints, especially when considering SMEs users. Surprisingly 70% of providers and 50% of users don’t see tech skills or financial resources among personnel as an important factor in the adoption process. Background and expertise in AI technology are not as necessary as understanding how to employ it within the company and the huge benefit coming from the implementation of such technology outweigh the cost.

While providers of AI music solutions do not perceive tech skills as an essential factor, pointing out that sales directors have normally limited knowledge of marketing technology tools and did not use this type of innovative solutions in the past. Consequently, digital tools are not often at the top of sales managers priority list, but they recognize the value of adopting them.

Surprisingly 70% of providers and 50% of users don’t see tech skills or financial resources among personnel as an important factor in the adoption process. Background and expertise in AI technology are not as necessary as understanding how to employ it within the company and the huge benefit coming from the implementation of such technology outweigh the cost.

Laura Callegaro

Researcher & Music Industry Expert

FACTOR 04 – Shift of power

Knowledge through data is more and more accessible

It is clear that there is a larger trend towards searching for technologies that can analyze various industry data points on up and coming artists and predict who the next big stars may be. What this study has brought to light, and that has been confirmed also by the interviewees (especially by providers) is that we are assisting a big shift of power. From managers, booking agents and label owners straight to the artists’ hands: thanks to new technology applied to marketing and the manifold new ways of music consumption, potentially everyone could be the manager of himself.

However, at the moment, this could be a false hope since marketing and managerial skills are still required.

For the music business AI may serve as one of the most influential tools for growth, as we enter a new era where humans – from artists and songwriters to A&Rs (artists and repertoire) and digital marketers in labels – will be complemented by AI in various forms and at different extent. This study and the global challenges the industry is facing are just additional proofs of the essential need of AI in this ever evolving industry.

“We enter a new era where humans will be complemented by AI in
various forms and at different extent.”

About the author

Laura Callegaro conducted this study during her master’s at the Berlin School of Economics and Law. She is a longtime electronic music expert and a real marketing wizard. As co-founder of the Berlin-based techno label JTseries and music-arts collective ENIGMA, Laura is actively contributing in revamping the music industry.