Swift gate won’t keep Ap­ple and Google from stream­ing mu­sic

Financial Mirror (Cyprus) - - FRONT PAGE -

Love or hate her mu­sic, there’s no denying that Tay­lor Swift has given the mu­sic in­dus­try a good shak­ing up and won head­lines by boldly re­ject­ing Spo­tify. Given the grow­ing pop­u­lar­ity of the world’s largest sub­scrip­tion­based stream­ing ser­vice, Google and Ap­ple are now also plan­ning to com­pete and cash in. But will Swift’s claim that stream­ing fails to fairly com­pen­sate artists have a wider scale im­pact? Will she make the tech gi­ants re-think their next steps? I’m not con­vinced. Her fans may see Swift as syn­ony­mous with mod­ern pop cul­ture, but the re­al­ity, as usual, is more com­pli­cated.

True, Swift’s stunt proved to be a win­ning move for the singer. She banked on the fact that le­gions of fans would pay for her lat­est al­bum and she was right. Her new record “1989” gen­er­ated around $12 mln in one week of sales, dou­ble the amount she was ex­pected to re­ceive from Spo­tify in one year. Yet, how many other artists are as big as Swift or as ca­pa­ble of mak­ing it on their own?

In the 21st cen­tury, we are a pow­er­ful group of con­sumers. Whether we’re at the com­puter or on the go, we en­joy ac­cess to a wide range of mu­sic, we ap­pre­ci­ate ex­po­sure to new tracks, and we don’t nec­es­sar­ily want to pay for ev­ery in­di­vid­ual song. The suc­cess of Spo­tify, with its 50 mln users, re­veals the huge de­mand for stream­ing. The fact that 12.5 mln of those users pay a set fee for the ad­ver­tise­ment-free Pre­mium ver­sion proves to high-tech ex­ec­u­tives that they are right to en­ter the fray.

YouTube is owned by Google, and Ap­ple has its iTunes store, mean­ing that both com­pa­nies al­ready ben­e­fit from a sig­nif­i­cant foothold in the mu­sic in­dus­try. While YouTube of­fers view­ers un­lim­ited ac­cess to mu­sic videos with ad­ver­tise­ments, iTunes charges a fee for downloads. In the near fu­ture, both com­pa­nies will also be mass-mar­ket­ing their equiv­a­lent of Spo­tify Pre­mium to their ex­ist­ing user base. Ear­lier this month, on Novem­ber 12, YouTube un­veiled Mu­sic Key which will of­fer ad-free mu­sic and videos with out-of-app back­ground lis­ten­ing for $9.99 per month. Mean­while, Ap­ple has bought the Beats head­phone stream­ing brand for $3 bln, and, if the ru­mours are true, it will be of­fer­ing the ser­vice on all iPhones and iPads for as lit­tle as $5 per month.

It is still un­clear what Ap­ple in­tends to do with its mu­sic ser­vices: will it merge iTunes with Beats, and will it look to profit from stream­ing or to use mu­sic as an in­di­rect tool for sell­ing de­vices? The ques­tion for Google is whether it will suc­cess­fully be able to at­tract pay­ing sub­scribers. Un­like Spo­tify which has years of ex­pe­ri­ence in this field, Google has tra­di­tion­ally made most of its rev­enues from ad­ver­tis­ers not users.

So, can th­ese two huge tech stocks take over the mu­sic world? It is cer­tainly pos­si­ble, and there is grow­ing space in the field of stream­ing for them to po­si­tion them­selves. They’ll just need to take one im­por­tant les­son from Tay­lor Swift: if you ex­pect fans to pay, you’ll need to im­press and con­vince them first.

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