Digitalisation offers British manufacturers a huge opportunity to drive efficiency and certify quality. So, how can they embrace this and encourage growth through technology? The answers may lie, somewhat surprisingly, in the music industry, the CEO of Digital Catapult, Jeremy Silver, explains.
Back in 1993, two unrelated tech developments occurred which in combination would have a profound effect on the music industry.
Tim Berners-Lee published the first version of what would become the worldwide web, and in Germany, Karlheinz Brandenburg published the protocols for the mp3, a music compression algorithm.
The combination of these two technologies made it possible for music to be posted to the internet and downloaded for free all over the world.
Previously, in the 1980s, the music industry worldwide had launched the CD format and avoided putting any form of encryption on it. Therfore, they inadvertently enabled the development of an entirely new form of music distribution, digital download, which would destroy almost overnight the business model of music retail.
In the 1990s, the music industry globally was enjoying its best ever decade, as the Spice Girls, Janet Jackson and the Rolling Stones ripped up the charts, the last thing it was worrying about was the advent of digital technology and the internet.
The inventions of Berners Lee and Brandenburg looked irrelevant until the sudden appearance, in 1999, of Napster precipitated a massive falling off in revenues. Peer-to-peer file-sharing sparked the birth of an entirely new way of distributing music and a massive litigious backlash.
Despite the obvious popularity among consumers of simpler, more portable ways to consume music; the leaders of the music industry refused to listen and instead responded by suing technology companies and consumers alike.
The genie was out of the bottle and no amount of litigation nor indeed legislation would enable a return to business models of the past.
Music retail was the first most obvious victim and major players like Tower Records and Our Price records went bust leaving the first gaping holes on high streets not to be replaced.
In that period, the industry moved from having six major record companies to three, and lost more than 30% of its global value.
In the same year that Tower Records went bust – 2006, a new company was founded, Spotify Music. Launched recently on the NASDAQ, Spotify leads a new generation of music companies, which have taken control of the distribution of music away from the record companies and now own it, offering high quality streams for reasonably priced subscriptions.
The data rich relationship that these models create, enables Spotify to use artificial intelligence (AI) to understand and cater to the tastes of its 70 million subscribers.
In a highly advanced, technologically innovative move, the company uses its AI discovery engine to distribute billions of tracks in the form of millions of individually personalised playlists every week.
This is a remarkable feat of AI engineering and a powerful indicator of the way in which digital customer relationships are likely to develop in the future.
Understanding the patterns and similarities between different pieces of music is not very different from understanding the patterns of usage of an aircraft’s engine. From a technology perspective these are similar challenges.
With automation and data driving the digital revolution in manufacturing, those organisations which freeze or fight against embracing new technologies face a similar fate to music retailers.
So, what can manufacturers learn from music’s digital successes and failures?
- Learn how to personalise and predict the future
The foundation for modern day music business success is the ability to build personalised consumer experiences and predict what people will want next. Spotify’s ‘Discover Weekly’ playlist, its ability to listen, learn, predict and personalise is what sets the brand apart.
These principles are already being applied to manufacturing. Automated factory machinery generates billions of data points every year and somewhere hidden among the noise are critical signals flagging that machine failure may be imminent. Using data analytics and AI to identify these or even predict them before they happen can help a manufacturer prevent costly downtime, additional cost and long-term damage.
Recently I met QIO, a start-up which is using open source AI code developed by Spotify, to drive their predictive maintenance product to help manufacturers of large jet engines know when their machines need maintenance. Gartner has recognised QIO as a ‘Cool Vendor’ for cleverly combining advanced analytics, Internet of Things and cloud computing so their engineers can create their own Industry 4.0 applications and deliver business outcomes faster.
- Invest in the virtual, not just the physical
Record labels are exploring new and exciting ways to wow consumers and create exciting, intimate experiences.
Interscope is working with the Dimension studio, a joint venture between immersive media company, Hammerhead, Digital Catapult and Microsoft Mixed Reality Capture Studio, to produce the world’s first virtual and augmented reality enabled music video for its female artist, Candice Pillay.
The finished product will make it look like she’s singing to her listeners on their coffee table, offering a 1:1 personalised, interactive and unique experience.
The links between a virtual popstar and manufacturing might not be immediately obvious, but there is huge value in being able to build, review and tweak a virtual model of a product before pressing go on its manufacture.
Simliarly, by designing and simulating production lines virtually, a production manager can identify bottlenecks, maximize efficiencies and reduce total waste before any physical work begins. As far as products go, VR simulation can be used by engineers to spot potential flaws in materials in the early design stages when small modifications are cheaper and less complex to make.
According to PwC, the manufacturing industry is already waking up to the potential of this technology. More than a third of US manufacturers are already using VR or plan to do so in the next three years, with adoption plans for AR technology roughly the same.
- Experiment with blockchain technologies
Distributed Ledger and Blockchain are the next big digital approach slowly going mainstream.
Digital Catapult has been exploring the application of these technologies to content, pioneering smart contracts for creative projects with an automated registry, eliminating the need for conventional contracts and incentivising creative talent to work outside their normal circles of trust.
Working with the UK Games Fund, we trialled with 12 different independent developers how to create a project and correctly attribute the IP being generated using smart contracts on the Ethereum blockchain. Pioneers in the music industry have also been exploring ways to make use of this technology and Middlesex University is doing extensive work in the area. Proposed use cases include it acting as a network database for music copyright, to facilitate transparent, frictionless royalty payments.
Just as payment processes of music copyrights and international sub-publishing chains are highly complex, so are manufacturers’ supply chains. Blockchain could be used to create global digital supply chains to create and maintain a shared and continually-reconciled database. Companies could use this to increase transparency, identify issues within a supply chain and streamline industrial processes.
For example, a car maker which releases a vehicle containing faulty parts — resulting in costly recalls and repairs – could potentially use the blockchain to trace the supplier of the faulty parts more efficiently, contain an issue and reduce time and labour costs.
These are just three examples of how digital lessons from one industry can be taken and adapted to drive another forward faster. There is plenty that manufacturing industry can learn from other sectors who have been hit first by the Internet.
It is precisely this kind of collaboration that is required to keep the UK at the forefront of the digital revolution. Which is why Digital Catapult is investing significantly in supporting and encouraging this by bringing together the best of the UK’s digital academics, innovators and traditional industry.
Digital breaks down differences between sectors. It is making supply chains cross over and it is enabling expertise that in the past had lived in silos be applicable across sectors, allowing new collaborators to share best practice and join the digital dots between sectors, so that we can all help drive UK digital innovation into the lead in global markets.