Topic: Music

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    Spotify is Talking to the SEC About its Planned Direct NYSE Listing (Aug 21, 2017)

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    Spotify Wants to Rival Facebook and Google in Advertising (Aug 17, 2017)

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    SoundCloud Closes New Investment, Shuffles Management, Pivots Business (Aug 11, 2017)

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    SoundCloud is Asking Existing Backers to Support a Rescue Deal (Aug 10, 2017)

    Despite SoundCloud’s repeated protestations that it’s not on the verge of going under, the scuttlebutt has been that it is indeed just a few months from running out of cash, and two recent new investors have been reported as potential saviors: Singapore’s Temasek Holdings and the Raine Group. SoundCloud is now reportedly communicating with existing investors and asking them to back the rescue effort by these two new backers as a last-ditch attempt to avoid having to wind down the business. Some of the numbers involved are a bit crazy – the new investment is $169.5 million at a $150 million pre-money enterprise valuation and some existing shareholders will see their liquidity preference slashed by 40%. But all this would apparently put the company on a much sounder financial footing and allow it to consider searching for a way out of its current predicament. I’m still bearish that there’s any way to really turn SoundCloud around given its history and what’s happened in the industry since it experienced its meteoric rise, and imagine the most likely long-term outcome is still an acquisition for intellectual property and possibly customer data. Update: Recode is reporting that the CEO will be replaced and kicked upstairs to the board chair role in favor of former Vimeo CEO Kerry Trainor if the deal goes through, which now seems very likely based on other reporting later in the day.

    via Axios

    Pandora’s Premium Subscription Growth Slows in Q2 (Jul 31, 2017)

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    Spotify Has 60 Million Paid Subscribers (Jul 31, 2017)

    The Financial Times reports that Spotify has hit the 60 million paid subscriber milestone, a fact that has now been confirmed by the company’s press site, where it also says it has 140 million active users in total, suggesting 80 million free users. It had previously reported 50 million paid users in early March of this year, suggesting it took just under 5 months to add a million subscribers, while Apple Music added around half that over the same period. It’s been fascinating to watch Spotify’s growth accelerate in the aftermath of Apple’s launch of its competing service, as streaming takes off as the dominant form of music consumption and paid subscriptions generate the vast majority of streaming revenue. That’s indicative of Spotify’s success in both establishing itself as the de facto standard in the market and creating social features that help win new subscribers, and also at signing partnerships with wireless carriers and others who help promote discounted subscriptions. As Spotify’s financial results for last year show, its average revenue per paid subscriber has been dropping rapidly, something I suspect has continued this year. But it’s the paid business that’s profitable on a segment basis, while free streaming loses money, which is why I suggested in a piece for Variety last week that it ditch the free tier. I’m only partially serious about that – the free tier remains by far Spotify’s best marketing tool, but it also remains a point of contention with the music labels, among which Warner is the remaining holdout in signing a new long-term deal.

    via Financial Times

    Google is Finally Planning to Merge YouTube and Google Music Services (Jul 27, 2017)

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    Midia Suggests Amazon Now 3rd Largest Music Streaming Service (Jul 20, 2017)

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    Spotify Signs Deal with Sony Music, Leaving Just Warner Among Majors (Jul 11, 2017)

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    SoundCloud Cuts 40% of Staff, Closes San Francisco and London Offices (Jul 6, 2017)

    SoundCloud is significantly reducing its staff and closing two of its offices in a bid to cut costs and reduce losses as one potential acquisition after another seems to fizzle. Twitter and Spotify were each reported as suitors earlier, but both ultimately moved on, and just in the last few days French music streaming service Deezer was also mulling an acquisition. I’m guessing these cuts are a sign that that deal also fell through and SoundCloud now realizes its only hope for survival is going it alone. That continues to be a really tough proposition, because SoundCloud continues to struggle to find a role for itself as a paid rather than free service. It’s become enormously popular as a free music source, but almost all the artists who start their careers on SoundCloud eventually cross over to the mainstream music industry and its more established business models, including paid streaming, which is becoming increasingly important and is driving almost all the revenue growth in the industry. SoundCloud’s failure to cross over with those artists to the paid streaming world is likely to be fatal unless salvation comes in the form of an acquisition.

    via Bloomberg

    Subscriptions Drove Nearly 80% of US Streaming Music Listening in H1 (Jul 5, 2017)

    BuzzAngle, a company which tracks the North American music industry, has released a first-half 2017 report, with lots of numbers on music consumption patterns in the US over the past six months, and Variety here has a summary of some of the key findings. One of the most striking numbers to me is that subscription streams accounted for nearly 80% of total streaming audio plays in the first half, with ad-based streaming only driving 21% of listens. That was slightly surprising to me, because the number of ad-based streaming music users is much higher than the number of paid subscribers, so I went back and checked some earlier data from BuzzAngle in this year-end 2016 report. It appears that this balance began to shift dramatically starting in the middle of 2015, which is not coincidentally when Apple Music launched. Importantly, BuzzAngle treats streaming video plays of music (e.g. music videos on YouTube) as a separate category, so the split mentioned above only accounts for pure audio streaming such as Spotify’s free and paid tiers and their equivalents. But it’s still striking that the balance has gone from roughly 50/50 between subscription and free audio streaming at the beginning of 2015 to 80/20 in Q2 of this year. And in Q2, subscription audio streaming actually eclipsed combined ad-based audio and video streams for the first time, so it’s now the largest category even when video plays are included. It’s worth remembering that this is US data, and the US has shifted dramatically from being a streaming laggard to being a leader over the last few years, so this certainly isn’t reflective of global behavior. But it is worth noting that subscription music streaming not only provides the vast majority of revenue and profits in the US, but now also a majority of actual plays as well.

    via Variety

    Tidal and Sprint’s Exclusive of Jay-Z’s 4:44 Causes Aggravation and Won’t Last Long (Jun 30, 2017)

    Jay-Z, one of the principal owners of the Tidal music streaming service, released his latest album, 4:44, on the service last night through a partnership with Sprint, which of course recently invested in the service and gave its subscribers six months’ free access. The intent was clearly to get more people to sign up for the service, while rewarding Sprint customers, but the effect was to aggravate many others who assumed they could merely sign up for the service after the album dropped and then found that it wasn’t available, at least right away. In addition, the exclusive seems pretty porous, and potentially short-lived: iHeartRadio has been streaming the album and will continue to do so for the first day, while Apple Music is reportedly getting the album a week in too. That’s a reflection mostly of the realities of the industry: though Jay-Z and Tidal’s other owners might like the idea of boosting subscriptions through exclusives like this, the reality is that the service has a tiny fraction of global streaming users, and over the long term Jay-Z and other artists are best served by the broadest possible distribution, especially given that he can’t pay himself for the exclusive in the way Apple has paid for them in the past. Exclusives generally seem to be waning as a source of differentiation for music services, but for Tidal its connection to artists (several of whom have been owners) has always been a major selling point. But if even its artist owners aren’t willing to stay the course on exclusives for more than a few days, it doesn’t have much hope of ever reaching significant scale, making the Sprint investment more of a temporary lifeline than true salvation.

    via Variety

    Pandora CEO Reportedly to Step Down (Jun 26, 2017)

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    Apple Reportedly Pushing to Lower Revenue Share to Music Labels (Jun 22, 2017)

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    Spotify Puts Collaborative Playlists in Facebook Messenger (Jun 21, 2017)

    Spotify has launched collaborative playlist creation in Facebook Messenger by way of an “extension” (Facebook Messenger’s apps with its app). This will allow multiple friends to work together to populate a playlist even if some of them don’t have Spotify accounts of their own. That in turn turns Spotify into something of a music layer within Facebook rather than merely a proprietary service, and once again raises the question of whether Facebook would ever want to buy Spotify outright and integrate it more tightly into the Facebook experience. Facebook has so far entirely sat out the music market, doing the odd partnership here or there but never becoming a serious player, even though social features are often touted as one of Spotify’s strengths and an important feature for music services overall (though I have to add that a survey I ran a couple of years ago suggested social features are actually well down the list of the most important features users look for). At any rate, this looks like a neat addition to Spotify’s feature set, as well as a useful integration for Facebook Messenger, and a good showcase of what’s possible in Messenger now that the original bots vision has been replaced by something a bit more realistic and focused, with all the user interface elements needed to power something like this.

    via Spotify

    Spotify Tests New Sponsored Songs Ad Unit to Place Songs in User Playlists (Jun 19, 2017)

    Any service which becomes central enough to its users’ lives eventually has aspects which become essentially intimate to the user: what feel like private places where the user feels extremely comfortable, and where intrusions of content, ads, or other unwanted outside elements feel like a violation. I suspect users’ own playlists on Spotify feel like just such a place to its loyal users, and so the news that Spotify is testing a “Sponsored Song” ad unit in which songs are literally placed into users’ playlists should be concerning. Almost every ad-based business model eventually engages in such violations, either temporarily or permanently, because the drive is always to push the boundaries of ad load and the places where ads can show – the most valuable real estate is also often the most invasive, and each ad platform has to draw its own line between what is and isn’t acceptable in the pursuit of ad dollars. Spotify’s recently leaked full results for 2016 show that its ad-based business is loss-making even on a gross margin basis, while its subscription business is profitable on that same basis, so there’s always going to be a push to squeeze more ad revenue out of each user. I’ve recently finished a piece for Variety which will publish in the next couple of weeks in which I argue that Spotify should in fact ditch its free tier and go subscription-only, because of all the tradeoffs the ad-based business forces, especially in its relationships with labels. But these types of encroachments into what should be sacrosanct aspects of the user experience are another example of the risks of the free tier, especially relative to the small rewards – just 10% of Spotify’s revenue in 2016.

    via TechCrunch

    Taylor Swift’s Music Comes Back to Spotify (Jun 9, 2017)

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    ★ SiriusXM Takes 16% Stake in Pandora, Which Also Sells Ticketfly to Eventbrite (Jun 9, 2017)

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    Sprint Offers 6 Months of Free Tidal HiFi to Subscribers (Jun 9, 2017)

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    Streaming Music Boosts Indie Label Payouts by 52% (Jun 8, 2017)

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