WHY STREAM­ING SER­VICES SHOULD GET RID OF FREE MU­SIC

HWM (Malaysia) - - THINK - by Ko­hWanzi

"Adele and Tay­lor Swift are lever­ag­ing their pop­u­lar­ity to shape on­go­ing con­ver­sa­tions and de­vel­op­ments, and the mes­sage is clear: Stream­ing is great, but a free tier should

not ex­ist.”

Think of the last time you went to a brick-and-mor­tar store to buy a mu­sic CD. If you can’t re­mem­ber when that was, you’re most def­i­nitely not alone. Two of the most prom­i­nent mu­sic stream­ing ser­vices – Ap­ple Mu­sic and Spo­tify – both have a com­bined to­tal of over 90 mil­lion users, and we bet that you’re one of them.

With over 75 mil­lion users alone, Spo­tify is one of the most pop­u­lar ser­vices around. As Jim Grif­fin, a dig­i­tal me­dia en­tre­pre­neur and for­mer record ex­ec­u­tive put it, “Spo­tify and oth­ers like it have be­come the new ra­dio play. In a very real way, not be­ing on Spo­tify is like not be­ing on ra­dio 10 years ago, and that’s a prob­lem.” Yes, a prob­lem – for artists, and in a more con­vo­luted way, for Spo­tify and its ri­vals as well.

The rise of stream­ing ser­vices has in fact brought about a seis­mic shift in the mu­sic in­dus­try. CD sales have fallen by 80 per­cent over the last decade alone, and this in an in­dus­try where phys­i­cal al­bum sales make up the bulk of in­come for record la­bels and artists. In the same vein, stream­ing – which pre­vi­ously com­prised a neg­li­gi­ble por­tion – now makes up 32 per­cent of the an­nual rev­enue of la­bels, ac­cord­ing to the Record­ing In­dus­try As­so­ci­a­tion of Amer­ica.

It’s no se­cret that artists think that stream­ing ser­vices aren’t pay­ing them enough. Tay­lor Swift, ap­par­ently the world’s rich­est ad­vo­cate for starv­ing mu­si­cians, pulled all her mu­sic off Spo­tify in 2014 be­cause she thought it wasn’t pay­ing mu­si­cians and pro­duc­ers enough. As part of the whole de­ba­cle, Spo­tify missed out on 1989, which even­tu­ally went on to sell 1.29 mil­lion copies in its first week and be­come 2014’s big­gest al­bum. Swift’s mu­sic is now avail­able on Ap­ple Mu­sic, but not be­fore she man­aged to com­pel Ap­ple to pay artists even dur­ing the ser­vice’s three-month free trial pe­riod.

En­ter 2015, and yet an­other wildly pop­u­lar artist is keep­ing her al­bum off the on­line air­waves. In the hours lead­ing up to the re­lease of 25, Adele’s first al­bum since 2011, re­ports emerged that 25 would not be avail­able for stream­ing on any ser­vice at all (not even Ap­ple Mu­sic, which has 1989). And this was af­ter the suc­cess of Hello’, the al­bum’s lead sin­gle that be­came the first to sell over a mil­lion down­loads in the U.S. One can only imag­ine the frus­tra­tion of the stream­ing ser­vices upon learn­ing that they were miss­ing out on the ini­tial re­lease of what was tipped to be one of the best-sell­ing al­bums in a long while. Bill­board even said that 25 could have the high­est-sell­ing de­but week since Nielsen SoundS­can started track­ing al­bum sales in 1991.

But Swift and Adele aren’t the only ones who haven’t fully em­braced stream­ing. Back in 2013, Bey­oncé de­layed the re­lease of her epony­mous al­bum on Spo­tify for months, opt­ing in­stead for an ex­clu­sive iTunes re­lease. Out­fits like Cold­play have also en­gaged in some­thing known in in­dus­try par­lance as win­dow­ing’, where an al­bum’s re­lease on stream­ing ser­vices is de­layed in or­der to avoid dent­ing al­bum sales. Adele’s de­ci­sion is sig­nif­i­cant be­cause of her mas­sive clout and fol­low­ing. As one of the most suc­cess­ful artists of her time, her move could po­ten­tially set a prece­dent for other artists to do the same.

The thing with names like Tay­lor Swift, Bey­oncé, and Adele is that they have the fi­nan­cial re­sources and au­di­ence to af­ford to keep their mu­sic off Spo­tify and other ser­vices, a lux­ury that not all artists en­joy. The grow­ing num­ber of users who stream also means that so-called un­fair pay­ments aside, many less pop­u­lar artists sim­ply need the added ex­po­sure. Stream­ing and other sub­scrip­tions re­lated rev­enue is pro­jected to in­crease to US$8 bil­lion in 2019, while down­load and CD sales rev­enue is ex­pected to fall by 39 per­cent and 44 per­cent re­spec­tively. This means that stream­ing and sub­scrip­tions could even­tu­ally com­prise 70 per­cent of all dig­i­tal rev­enue, def­i­nitely not a fig­ure to be ig­nored.

The shift to­ward stream­ing has in fact been as­so­ci­ated with a fall in rev­enue, which is a big part of the prob­lem for pro­duc­ers and mu­si­cians. A 2014 re­port by MIDiA Re­search on how stream­ing was chang­ing the mu­sic in­dus­try found that stream­ing con­sumers are ac­tu­ally buy­ing fewer al­bums. 23 per­cent of mu­sic stream­ers used to buy more than one al­bum a month but now no longer do so. Fur­ther­more, early adopters of stream­ing ser­vices came largely from the same group of peo­ple who used to pay to down­load mu­sic, hurt­ing down­load sales as a re­sult. The prob­lem is also not quite solved by pay­ing sub­scribers. Most ser­vices cost around US$9.99/month, a fairly steep drop from the US$20 to US$30 spent monthly on al­bum pur­chases.

How­ever, with re­gard to 25’s shun­ning of stream­ing ser­vices, Mark Mulligan, a dig­i­tal me­dia an­a­lyst with MIDiA Re­search is spot on when he says that, “This is a mi­nor is­sue for Adele, but a ma­jor is­sue for the stream­ing ser­vices.” In­deed, when you miss out on both 1989 and 25, two of the big­gest al­bums in re­cent mem­ory (in ad­di­tion to de­layed re­leases of myr­iad other al­bums), how far can you ar­gue that you de­serve to be the mu­sic li­brary of choice?

When it comes to artists like Tay­lor Swift, they may not need the stream­ing ser­vices, but the ser­vices most def­i­nitely need them. Jonathan Dick­ins, Adele’s man­ager, has said that their big­gest ob­jec­tion to stream­ing is the wide avail­abil­ity of ad-sup­ported mu­sic for free, a sen­ti­ment shared by many who make mu­sic for a liv­ing.

We said ear­lier that Spo­tify’s suc­cess was a prob­lem for it as well, and that’s be­cause it’s had to jug­gle the pres­sure from artists to cut off free ac­cess to their mu­sic and the need to avoid alien­at­ing its cur­rent users. Only 20 mil­lion of Spo­tify’s 75 mil­lion users are pay­ing sub­scribers, and the fig­ure is 6.5 mil­lion out of 15 mil­lion for Ap­ple Mu­sic. Stream­ing ser­vices need artists, but giv­ing in to artists’ de­mands to make con­tent ex­clu­sive to sub­scribers could end up alien­at­ing the ma­jor­ity of their users.

The prob­lem may be that many users view stream­ing as a 21stcen­tury ver­sion of ra­dio, an im­pres­sion that isn’t helped by ra­dio-like ser­vices like Pandora and Rhap­sody. Ra­dio is free, so they don’t see why they should have to pay for stream­ing when there are free ver­sions avail­able that work well enough. Un­for­tu­nately, that is a mis­guided per­cep­tion as stream­ing rep­re­sents a mas­sive dis­rup­tion in the mu­sic in­dus­try and is far more than just an al­ter­na­tive way to con­sume mu­sic.

In­stead of own­ing copies of al­bums and songs, con­sumers are now sim­ply able to ac­cess th­ese same tracks on­line from a com­mon source. CDs seem painfully ar­chaic in com­par­i­son, but if stream­ing ser­vices are go­ing to re­place them as a vi­able rev­enue source, they’re go­ing to have to start charg­ing more, and yes, re­voke free ac­cess to mu­sic. Adele and Tay­lor Swift are lever­ag­ing their pop­u­lar­ity to shape on­go­ing con­ver­sa­tions and de­vel­op­ments, and the mes­sage is clear: Stream­ing is great, but a free tier should not ex­ist. If you pay to watch con­tent on Netflix, why shouldn’t you have to pay to lis­ten to mu­sic? Stream­ing ser­vices will have to reeval­u­ate their busi­ness strate­gies, but per­haps the big­gest change must come from con­sumers, who have to ac­cept that paid stream­ing ser­vices might just be­come the new norm.

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