Music execs warm to streaming solutions
By James • Feb 17th, 2011 • Category: Industry News- Photo: datalove / Flickr
The change averse music industry has warmed to streaming music services, with industry leaders finally warming to the idea that smartphone streaming is the future of the medium.
Eclipsing everything
David Joseph, who heads up Universal Music, recently told The Guardian that streaming services like Spotify and Last.fm were ‘eclipsing everything’ in terms of cash generation in the music industry.
He said: ‘It’s a different digital currency to downloading. You’re dealing there with 175 million single tracks bought a year compared to seven billion streams of music.’ So, in effect, what Joseph is copping to, is if these streams are monetized, at significantly less revenue per instance than each download, the record labels could still make more money from the streams.
This is the future
He continues, saying: ‘The revenues are significantly growing and I fundamentally believe that streaming and subscription models with unlimited access on all devices are the future of our business. But will people still listen to albums, or just single tracks, or send playlists to their friends? Answer: all of the above.’
Advertising won’t work, though
A future David Joseph and others do not see, however, is one where ad-supported streaming music services work. The basic problem is the revenue per stream derived from advertising per user is less than that derived per stream from users who pay a subscription fee.
This is widely cited as the reason Spotify has struggled to break into the US market, because the company insists on having a free advertising supported component to its service in conjunction with the paid-for service, whereas competitor Rdio only has a subscription service.
Thank you for waking up, finally
It’s always strange watching the music business warm to models consumers and service companies have already shifted to. Streaming music services are not new, and music listeners have long known smartphones were the future medium for the consumption of music. I suppose rather show up late than never, right?
Tags for this article: smartphones, music


