Narrative: Streaming is Saving Music
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Narrative: Streaming is Saving Music (Jan 28, 2017)
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Apple is starting a new program through which it will spend a month at a time promoting young relatively unknown artists through its various Apple Music assets, including the streaming service, Beats 1 Radio, and in other venues. When Apple first launched Apple Music, the Connect feature felt like it could be a great way for artists of all sizes to connect organically with their fans through the platform, but it really hasn’t taken off in that way. Meanwhile, SoundCloud and YouTube continue to do better in helping young artists get their start before they get signed to labels. This effort is aimed at a somewhat later stage in the game, but builds on Beats 1 DJ Zane Lowe’s reputation for giving artists their big break, but if it’s a monthlong effort it’s hard to see how it will be scalable. However, it’s all part of Apple’s pitch that its service is the best for artists, whether that’s through exclusives, discovery and promotion, or simply getting paid for their work (since it’s one of the few services that doesn’t have a free tier).
Pandora Opens Streaming Subscription to All (Apr 18, 2017)
Jay-Z quietly removes catalog from Apple Music and Spotify as Tidal continues fight for exclusives – 9to5Mac (Apr 7, 2017)
Jay-Z, one of the owners of the Tidal music service, has apparently pulled all his solo music from both Apple Music and Spotify, though without any kind of official explanation or much fanfare. In theory, it’s likely that he’s trying to reinforce one of the original value propositions of Tidal, which was that its artist-owners would provide exclusives for their music, though in practice most of the owners have continued to license their music to other streaming services, which have far bigger subscriber bases. Tidal has struggled financially, and recently got something of a lifeline from Sprint, but it may have decided that it needs more exclusives to drive interest and subscriber numbers. I’m not convinced it’s going to do all that well on that basis given that the vast majority of the global music catalogue is still available on other services, but this is yet another sign that exclusives – whether temporary or long-term – are one of the few sources of differentiation to streaming music services, whether or not that’s good for their subscribers.
This statement from Spotify and one of the big three music labels confirms a report from a few weeks back, which itself made perfect sense. It’s paid streaming that’s been driving a revival in the music industry, not ad-based streaming, and as such the labels want to do what they can to foster that model. Since Spotify is simultaneously the provider with the largest paid streaming base and also offers a big ad-based service, it’s natural that the labels would want to use what leverage they have to push Spotify to differentiate its paid offering more. Spotify, in turn, needs both to sign long-term deals with the labels and reduce its royalty rates so that it can gain investor confidence ahead of an IPO. So this is a win-win, though it forces CEO Daniel Ek to compromise on a key principle he’s held to previously, which was not preferring the paid service in terms of the music library it offers. Still, we’ll likely see similar deals with the other labels, which may finally pave the way for that IPO, which is increasingly urgent for Spotify.
via The Verge
The RIAA just released its annual report on the financial state of the US music industry, and it appears that streaming crossed the 50% mark of recorded music revenue in 2016 for the first time, landing at 51% for the year, up from just 34% a year earlier, an increase of around $1.5 billion year on year in total streaming revenue. Apple Music was clearly part of that picture, as it grossed around $1.5 billion globally last year by my calculations, but once you spread that number across the countries where Apple operates and subtract its cut, it clearly wasn’t the only contributor to growth, with Spotify obviously another big contributor. Other things worth noting: this is really about paid streaming, which dominates overall streaming revenue, with around two thirds of the total despite far fewer users (around 25 million at the end of the year versus a likely 150 million for ad-based streaming). This streaming growth actually helped drive digital and overall revenue growth significantly higher this year after a fairly stagnant 2015 too. Also, based on my analysis of the three major music labels, streaming is still under 40% of their recorded music revenue globally, so the US is ahead of the global curve here.
It’s impossible not to see this new Spotify show as, to put it charitably, inspired by Carpool Karaoke, especially given the role the standalone version will play in Apple Music. But kudos to Spotify for finding a new angle on the concept and making it distinctive. It’s also interesting to see hip hop as the focus here – where Carpool Karaoke crosses all genres, this show will be much narrower and therefore find a smaller but potentially more engaged and passionate audience. It’s important to note that hip hop has been a big part of the rise of streaming service, and Apple has heavily leant on hip hop in building its music service, especially when it comes to exclusives and Beats 1. I’m curious to see how each of these shows does on its respective service, especially given that James Corden, arguably the element that makes the original version of Carpool Karaoke work, won’t be a permanent feature in the Apple version.
This article seems to be the result of a push by Kobalt around its new royalty-tracking app for the artists it works with. If you don’t know Kobalt, it’s a music tech company which acts as an intermediary between artists and streaming services and helps ensure accurate tracking and payouts of royalties. It’s using the unique data it has on Spotify streaming to push its app and broader service this week, and this article picked up on some of the data about how Spotify drives listening of less-known artists and songs with its curated playlists. This sort of thing used to be the province of radio, but of course in recent years the streaming services have increasing power to make new artists, although they’ve used that in different ways, with Apple using Beats 1 radio to literally replicate the radio experience in a streaming setting, while Spotify uses its playlists feature.
via Watch what happens when Spotify gives unknown music acts a big push – Recode (you might also be interested in this episode of the Beyond Devices Podcast, in which I interviewed Ryan Wright, CMO at Kobalt)
Spotify Acquires MightyTV to Improve Ad Targeting (Mar 27, 2017)
When I saw some of the headlines about Spotify buying a company which is good at recommendations, I assumed that would be the focus of the acquisition, but it turns out that the focus is actually on improving Spotify’s ad targeting. So you won’t see better music recommendations, and if you’re a paid user you won’t see any change as a result of this buy at all. I was a Spotify subscriber for a time, but have never used the ad-based service, so I don’t know how the targeting is at this point, but if it’s anything like other online video and audio services, it could use some help, so this seems smart. But of course good targeting requires good data on users, and I’m curious to see how Spotify will improve in that department – by itself, it presumably knows relatively little about its users beyond their musical tastes, so better targeting would likely require buying in third party data to enhance its user profiles. And therein, of course, lies the inherent tension in all ad-based business models – user privacy versus effective targeting.