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Music and money

What have music and money got to do with each other?  Visa knows. 
Visa just sent me a new white paper on the similarities of the
experiences of the music industry over the past decade or so and the lessons
that the industry teaches banks.

Here’s the brief overview:

Visa Europe is in the
data business.  
When a Visa payment
is made, all that is exchanged is data.

The twenty fifth of February 2013 was a watershed moment for
the global music business.  It was the
day the International Federation of the Phonographic Industry (IFPI) reported
that global revenues from recorded music had returned to growth – for the first
time in 14 years.

The rise itself was modest (at just 0.3 per cent) and the
value of revenues was still 70 per cent below the 1999 peak, but the news was nonetheless
significant – indicating that the business may be coming to terms with the
shift to digital, and offering a shred of hope to other sectors facing similar

Of course, payments and music are very different businesses.
We are not rock stars. And the services we provide tend not to fire the emotions.
Even so, the changes in the music industry do resonate.

The liberation of payment data means that we operate across
a larger, more open ecosystem. It also opens up new opportunities to engage
much more closely with consumers and retailers. And these opportunities are
appealing, not just to incumbent payment businesses, but also potential partners
and would-be competitors.  At the same
time, revenues are under pressure.

We may not be plagued by piracy (in fact, fraud levels are
close to a historic low, equating to just 0.04 per cent of all spending). But regulatory
intervention is putting pressure on current business models. And, as new
payment alternatives emerge, market pressure adds to the burden.

So, considering what’s happened in music, here are six big
lessons for payments:

1. Embrace the change

2. Innovate the business model

3. Understand what the customer really values

4. Make it easy and convenient

5. Create great partnerships

6. Recognise and build on core capabilities

If you want to download the whole paper, just click: “Lessons
from the music business: How to profit from next generation payments”

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • It follows from this that those financial services companies that have got a grip on their data infrastructures will be best placed to take advantage of this type of business model. I think many banks still have a way to go on this

  • Jeremy Kidd

    I can’t help but think that the hardship faced by the music industry (14 years of lower earnings) pushed them into focus, enabling the turnaround. As soon as bank earnings started to decline the whole world was on fire and it was only a couple of years before it turned back around. Not enough time to make true changes. Now that things are looking up, banking and payments are likely to continue to rest on their laurels, react to some incremental innovations, and squash potential disruptors.

  • Vinyl is also making a hit of a comeback – does that mean we should dig out our old cheque books too?!!