Narrative: Streaming is Saving Music
Each narrative page (like this) has a page describing and evaluating the narrative, followed by all the posts on the site tagged with that narrative. Scroll down beyond the introduction to see the posts.
Spotify now has 50 million paid subscribers – The Verge (Mar 2, 2017)
Spotify keeps extending its lead as the leader of the paid streaming market, although it’s worth noting that not all those subscribers are created equal – see, for example, its recent partnership with the New York Times and many more and larger partnerships with mobile carriers. Those subscribers are all paying a lot less than the standard $10 per month rate Spotify charges standalone subscribers, and they likely make up an increasing proportion of the total. Still, it’s quite the achievement by Spotify to get to this milestone, especially its rate of growth over the past year or so. Next achievement to focus on: turning all that growth into profits, something that remains elusive.
via The Verge
Spotify is preparing to launch a Hi-Fi music tier – The Verge (Mar 1, 2017)
Another front in the challenging streaming music differentiation war: higher-fidelity music, something Tidal and some other niche services already offer but which the big players mostly haven’t. Spotify only appears to be testing this option with customers at the moment, including a range of different prices for the upgrade ($5-10), and there’s no guarantee it launches. Obviously, higher revenue per month could expand margins, but only if Spotify doesn’t have to pay commensurately more for the content itself. And of course the portion of users who would actually pay more per month is likely to be very small as a percentage of the total.
via The Verge
Spotify expands its push into original content with new podcasts – TechCrunch (Feb 23, 2017)
It’s becoming increasingly clear that original content is going to be an important part of differentiation in the streaming music space going forward, between Spotify’s earlier video content and now several new podcasts, and Apple’s focus on Beats 1 radio and its TV shows. The difference is, of course, that Spotify has a free tier, where this original content will also be available, while Apple will restrict its TV shows to paying subscribers. For Apple, the cost isn’t that big a deal – it has a much bigger company to fund such investment – but for Spotify such additional costs will push it yet further away from profitability without any big direct revenue benefit.
via TechCrunch
The Key to Pandora’s Subscription Hopes: Country Music – WSJ (Feb 21, 2017)
This is a fascinating angle on Pandora’s shift to becoming an all-you-can-eat subscription music provider next month: the idea that it’s uniquely appealing to country music fans and hopes to convert many of them to $10-a-month paying subscribers. The article presents lots of interesting evidence on every point but one: that country music fans aren’t already subscribing to other services – a point it finally concedes in the penultimate paragraph. It certainly is true that other streaming services have focused on other genres, principally pop and hip-hop, and that country music fans have been a neglected bunch. But if Pandora is staking its push here on winning over this group, I suspect it’ll have a tough time making a business out it – subscription music is a scale business, and Pandora’s appeal will have to be broad to be successful.
via WSJ
Apple Debuts Planet of the Apps Trailer – Recode (Feb 14, 2017)
Apple debuted the trailers for its Planet of the Apps and Carpool Karaoke shows at the Code Media conference last night. These are two of Apple’s first bits of original video content, both of which will debut as part of Apple Music. Carpool Karaoke still features James Corden on some episodes, but not all, which will detract at least somewhat from the original format, which is compelling in large part because of him. Planet of the Apps is a Shark Tank-style reality / competition show focused on apps. This clearly plays to Apple’s strengths, and gives potential competitors a big draw in the form of featured placement on the App Store. This isn’t my kind of thing – I’ve never been a big fan of reality shows – but Shark Tank is very popular, and Apple’s show mirrors its format pretty closely, so it should do well among the same people that like that show. In addition to music exclusives, these bits of video content are another unique feature of Apple Music, which should help set it apart versus the competition. But to my mind, it’s more interesting to see this as an ongoing push by Apple into original content, which for now may live in Apple Music but certainly has the potential to become the foundation of an Apple subscription video service in future, which could be a much bigger deal.
via Recode (Planet of the Apps trailer here)
Facebook Tries to Offer Music Labels a YouTube Alternative – Bloomberg (Feb 13, 2017)
Billboard reported at the end of December that Facebook was working on a Content ID-like system for policing music rights infringement on the site, and this Bloomberg piece suggests more of the same. There are several challenges here. Firstly, most Facebook video is published privately, so it’s impossible for outsiders to truly gauge the scale of infringing content. Secondly, a lot of the music videos shared on Facebook are covers, not originals, making detection tough. And third, though Facebook wants to set itself up as a more attractive alternative to YouTube, with advertising as its business model it’s unlikely to pay out at a much higher rate, and in fact may detract from the progress being made by paid streaming services in compensating artists more adequately by creating yet another massive source of free music listening. As such, I’m not convinced that the labels should jump too quickly into bed with Facebook. And that’s tough for Facebook because it clearly wants to take share from YouTube, but music is a huge component of the latter’s popularity.
via Bloomberg
Amazon, Apple, Google and Other Tech Companies on the Billboard Power 100 (Feb 9, 2017)
Billboard does an annual Power 100 ranking of the most important/influential execs in the music industry. Coming at this from a tech angle, there are several notable companies on the list: Spotify’s Daniel Ek takes the top spot, several Apple folks are at #4, Amazon at #12, iHeartMedia at #19, YouTube at #30, Pandora at #34, Facebook is at #54, and various others are scattered through the second 50. Amazon’s ranking is surprisingly high, but is entirely due to Billboard’s perception of Echo and Alexa’s role in transforming music, as illustrated by Billboard’s interview with Jeff Bezos and Amazon Music head Steve Boom. I think the take here is a little overblown, but there’s no doubt Echo and Alexa are changing the experience of music for the small minority of people who use them. YouTube’s relatively low ranking is surprising given how important a channel the site is for the music industry, but of course its relationship with the labels and artists is complicated. This kind of ranking exercise is always somewhat arbitrary, but it’s interesting to get a music industry take on the tech companies and their relative importance here.
via Billboard Bezos Interview (see also Power 100 rankings)
Music teams from YouTube and Google Play combine – The Verge (Feb 8, 2017)
It’s always been odd that Google has two separate music streaming apps rather than simply two on-ramps to a single streaming app, so it’s good to see it combining the teams behind them as at least a first step towards eventually having a single music experience too. Neither of Google’s apps ever shows up on industry charts of subscribers, so the numbers on both are likely small still, so this is a great time to make a change before foisting a lot of upheaval on a large base of customers. Note also the bizarre final paragraph in this piece, which somehow tries to tie Google’s move here into a narrative about apps in general falling out of favor with users.
via The Verge
New York Times Offers Free Spotify Service to Boost Subscribers – Bloomberg (Feb 8, 2017)
Spotify has long partnered with wireless carriers to boost subscription numbers with subsidized memberships, and it now looks like it’s going to do the same with the New York Times. The subscriptions are generally going to net Spotify quite a bit less than its standard US $10 per month rate (though it’s impossible to know how much), and that in turn devalues the paid subscriber numbers Spotify regularly releases. It’s the leader by paid subscriptions by some margin over Apple Music, but it’s quite possible that Apple Music could end up netting (and paying out) as much revenue as Spotify in the next year or two even with far fewer “paid” subscriptions because of this kind of discounting. And of course a discounted subscription likely means a lower margin for Spotify too, further complicating its efforts to try to turn a profit ahead of a possible IPO. Lastly, music and news are an interesting bundle, given that those are the two content categories for which Apple has launched its own app in the last couple of years.
via Bloomberg
Spotify may delay IPO to 2018 as it rethinks licensing deals – TechCrunch (Feb 2, 2017)
As I’ve argued for some time now, it doesn’t bode well that Spotify, despite being the largest paid streaming music service in the world, doesn’t seem to be able to turn a profit. A big part of the problem is that its relationships with labels dictate sharing a very high percentage of revenue with them, which leaves Spotify with very little margin to cover all its other costs. It sounds like Spotify is now considering postponing what was to have been a 2017 IPO by another year while it goes back to the labels to renegotiate those problematic deals. The TechCrunch piece linked here suggests than appetites for IPOs of companies without profits has diminished, but that isn’t really the problem here – Spotify’s real problem has been that there hasn’t been an obvious route to profitability even if all its current growth trends continue – unlike a SaaS business with no profits, there’s no obvious growth lever that turns things around eventually. It’s Spotify’s fundamental business model that’s the problem here, and absent renegotiated contracts with the labels it’s hard to see how that changes.
via TechCrunch