Tag Archives for " streaming music "
It looks like Pandora isn’t the only streaming company having big financial problems. SoundCloud is reported to now be in a do or die situation where it must either raise some serious cash or sell for pennies on the dollar. The company has been trying to raise $100 million to keep the doors open for almost a year now with no success, and it hasn’t been able to find a buyer in that time either.
One of the reasons why a buyer hasn’t stepped up is that SoundCloud valued itself too highly, reportedly seeking $700 million, but now that number is said to have decreased significantly. The company has raised about $250 million so far (including $70 million from Twitter), so now any offer over that number will be considered, which just goes to show how dire the circumstances seem to be.
One of the big problems is that although SoundCloud reportedly has 175 million users, not many of them pay for the service. They’re mostly indie artists who use it has a repository for their music, and while that serves a major slice of the market, it’s not necessarily one that has been successfully monetized yet. Plus, that 175 million figure hasn’t been updated in 3 years, so it’s possible that its now even lower.
The company has tried to boost its revenue by launching two paid tiers, one $10 per month and the other more recently for $5, which hasn’t exactly set the world on fire. That’s because most music consumers go to the one of the larger services first before they consider SoundCloud, and just like any other streaming service, it’s very difficult to get someone to either buy an additional service or change from the current one that they’re using.
All this means that it’s entirely likely that the streaming landscape will face even bigger changes in the coming months. SoundCloud plays an important part in the indie music environment, but if you’re an artist, it might not be a bad idea to have a plan B ready.
Here’s the Music Industry News Roundup for the week of March 10th, 2017. Nothing major, but a lot of interesting business tidbits this week. Let’s get into it.
Streaming music is a bad business according to this article. It is if that’s the only product you have. As I’ve explained before, it’s a loss-leader for Apple, Amazon and Google.
But the music business is a model for non-music businesses. Which means, learn by our mistakes.
Spotify is quietly A/B testing the pricing for a high-resolution tier. It’s called Spotify Hifi, and it will be either $5 or $10 more than the normal paid subscription.
And Spotify has hit 50 million paid subscribers. That said, it’s beginning to look like the streaming business is slowing down. Time to lower the price? That will give it the kick it needs.
Nirvana’s Nevermind is still on the charts 350 weeks later. It has a way to go to top Pink Floyd’s Dark Side of the Moon ( 741 weeks), but that’s still pretty impressive.
Another indie artist goes #1. Move over Chance the Rapper, Stormzy hit the top of the charts in the UK.
Indie artists should not skip streaming. CD Baby’s CEO gives some pretty interesting numbers that just backs up what we all know – the music industry is quickly become all about the stream.
Songwriters are pushing hard for increased royalties from interactive streaming. It’s currently a pittance of a pittance, and they deserve more.
New York City is the center of the music universe. More ticket sales there than anywhere else, and it even has twice as many digital music startups than Silicon Valley or Los Angeles.
Iron Maiden is beating the scalpers. They’ve managed to bypass 3 of the top secondary ticket sellers in the UK. Quite an achievement!
That’s the Music News Roundup of what went on in the music industry last week. Have a great week ahead!
Most pundits in the recorded music business have been advocating for a low-priced streaming music tier for years, predicting that real growth in that end of the business won’t begin until the entry level price falls from $10 to around $5. While Amazon introduced its low-priced tier at the end of last year, you needed to own either an Echo or Dot to take advantage. Now SoundCloud has launched it’s new $4.99 tier to try to compete with some of the deeper pockets in the industry.
The service is called SoundCloud Go and it offers 120 million songs, no ads, and the ability to listen offline. The company’s original tier, SoundCloud Go Plus, is still $9.99 but offers 150 million songs in its catalog.
Considering that all other streaming services have far fewer songs available (Apple Music has 40 million and Spotify 30 million), that might seem like a strong selling point except for the fact that most of these songs are by unknown artists. Even with the other music services, most streaming is dominated by hitmakers, so high catalog numbers don’t really mean anything in the end.
What does count is registered users and paying subscribers though. SoundCloud says it has 175 million users, but won’t say how many of these actually currently pay for the service.
Many think that the company is in serious financial trouble and that SoundCloud Go is a last-ditch effort to increase its paid subscriber base. There have been numerous rumors over the last few years of a larger company buying the company but that has yet to happen, and the official company line today is that it’s not for sale.
SoundCloud definitely has a place in the music ecosystem as it’s the main repository of indie music, and is key to any indie artist music strategy. That doesn’t mean it can make money from that however, as has been the case so far.
Here’s the Music Industry News Roundup for the week of February 3rd, 2017. This has been a big week for social media changes, but there are still some interesting record label-related developments. Let’s get into it.
Sony earned $1.2 billion from streaming last year. It still made more from physical sales, but not by much.
Streaming is changing music consumption, but is that good? Well, the measurements are no different, and this article doesn’t think they’re as fair and equal as they should be.
Investors are putting more money in the music business. That’s because they believe it’s finally coming back, and owning music publishing is an appreciating asset (which it’s always proven to be).
Vevo has now reached 100 million users. The music video network partially owned my Universal Music was seen by 43% of all viewers who watched YouTube in December. The funny thing is, most of them aren’t even aware that they’re watching it.
Speaking of Vevo, MBW thinks Facebook should poach it from YouTube. The article says that it could make approximately $32 billion a year if it did, which sounds a bit far-fetched to me. Still a good idea though.
Soundcloud’s getting deeper into advertising. Users don’t want to hear this, but the company is trying to increase revenue to look like a better acquisition target.
Snapchat is adding augmented reality. A new lense will allow users to identify environmental elements and superimpose digital effects on top. It’s still experimental so we won’t see it for a while, but it’s cool that it’s in development.
Hulu launched its virtual reality show On Stage. You need the service’s VR app in order to get the full effect, but it’s good to see the technology getting off the ground in music.
Facebook is going to start paying for videos. Both up front and revenue sharing from ads will make video content creators happy. It’s also a shot across the bow of YouTube.
People are upset that Instagram now does groups of photos. They feel it’s trying to become all things to all people and losing its focus.
That’s the Music News Roundup of what went on in the music industry last week. Have a great week ahead!
Nielsen has just completed a study analyzing the habits and lifestyles of U.S. music listeners on Instagram, and the results show that if you want want to reach music lovers, that’s one of the best platforms to use for promotion.
What was determined? First of all, Instagram users are huge music fans, and show it with their wallets. They spend 42% more money on music and listen 30% more than the general population. In fact, the typical Instagram user spends a surprising $269 per year on music.
What do they listen to? 41% listen to pop/Top 40, 39% to rap and hip-hop, 33% to R&B, 30% to rock, 23% to country, and 13% to EDM.
When it comes to music consumption, a whopping 90% of Instagram users stream music, and they’re more than twice as likely to pay for it too. And where do they get it from? 49% get it from YouTube, 44% from Pandora (a surprise), and only 29% from Spotify. They are also 3 times more likely to use Soundcloud or Apple Music.
Instagram users are also frequent live events like concerts and clubs, and are especially drawn to a club with a DJ. What’s more, during live music event, Instagram is the #1 platform and is used 83% more for sharing with concertgoers, artists and fans than any other platforms. They’re also more likely to use smartphones for activities than the general population. This includes purchasing music that they hear at a concert, visiting a performer’s website or social presence, calling friends to let them hear the concert, or sharing videos of the event.
For sure, Instagram shouldn’t be the only social platform in your promotional arsenal, and you certainly can’t ignore the others even if most of your fans live here. That said, the study shows is that the platform can be very important for reaching either your current fans, or potential ones.
It’s safe to say that if you’re involved in music, the last thing you think about is making war. That’s why it comes as a great surprise to discover that the world’s largest arms dealer, Lockheed-Martin, owns 184,000 shares of Pandora worth almost $2 million. To be sure, this is a drop in the bucket for both companies, but it’s still a curiosity.
According to Music Business Worldwide, Lockheed Investment Management Co, the investment arm of the company, routinely invests in tech companies that it feels might make a future breakthrough. At some point, Pandora looked like it fit into that category, although these days the company is more follower than leader. You also have to wonder what the synergy is between the two companies, since a music streaming company is about as far away from selling state-of-the-art arms systems to large countries like the United States, Germany and Japan, just to name a few, than you can get.
It’s also interesting that Lockheed sold 4,000 shares of Pandora at the end of September, which the company reported in an SEC disclosure at the beginning of November, which is how MBW discovered the investment.
According to Crunchbase, Pandora raised $64 million of funding before it went public in 2011, so Lockheed’s $2 million is small potatoes in the grand scheme of things. And of course, when you look at it from Pandora’s standpoint, when you need money to stay in business or grow, you don’t necessarily care where it comes from. It’s also unknown if the company’s investment came before or after Pandora went public.
The investment seems at odds with both Lockheed’s propose in life, and music in general, though. Music, and the people associated with it, has always been more about peace, love and understanding than blowing everything to bits with weapons and making money from it.
Neil Young pulled his music off of every streaming service in 2015 because of the poor sound quality in favor of his own Pono service, but in a reversal, now he’s back. Although last May his music was made available on Tidal, now it can be found on both Spotify and Apple Music.
Pono was Young’s idea for a high-resolution streaming service complete with it’s own player, but the timing, as well as expectations for demand, were off. By the time it launched, music lovers had abandoned music players like the iPod for streaming, so putting an expensive, oddly shaped device in the pants pocket was out of the question, regardless how it sounded.
While Neil Young has always used the argument that his fans wouldn’t stand for the lower quality sound and expected more from him, that doesn’t seem to be the case, and his entry back on the various streaming services is an admission to that premise.
This is another example of how fans care more about convenience than anything else. Although improvements in sound quality have frequently come with new delivery technologies that the music industry has adopted, that’s never been the reason why most people would buy or use the product, although for many it was a happy coincidence. It’s been improved ease of use that’s always won the day, and streaming has been the best example of that ever.
Although the sound quality isn’t up to par with vinyl and CDs, the fact that you can access literally millions of songs almost anywhere anytime is a far more attractive feature to most users. That said, the streaming quality is getting better, and high-quality tiers from both Deezer and Tidal are available for anyone who cares enough.
I predict that by the end of 2017, one or more of the mainstream streaming services will also make the move to high-resolution, which may put the quality issue to bed for good (unless you’re an audiophile, of course).[Photo: Andy Roo]
Billboard recently posted a very interesting article about 11 artists, some major, that still can’t be be found on a streaming network. While you have to admire that they stand for their principles, it does seem to be a somewhat dated view, since streaming has not only become a major source of income for previous holdouts like The Beatles, Pink Floyd, AC/DC and Led Zeppelin, but has also helped with their visibility and physical sales as well. Another major holdout in Garth Brooks just came in from the cold last week, with his exclusive deal with Amazon Music Unlimited.
So who are the holdouts? They may surprise you as they not all in the rock genre, who’s artists seem to make up the bulk of the pushback against streaming.
De La Soul
Of course, if you want to find bootleg copies of any of these artists, they’re certainly there, as is the user generated uploads on YouTube (although some of the above do have official videos on that platform). It’s also interesting to note that, with the exception of York, all of these artists have seen their best days behind them. Almost all current artists have grown up in a streaming environment and have no connection to the physical music business of the past, so they don’t know what they’re missing nor do they care.
Still, if these holdouts expect the music industry to return to the way it was, they’re sadly mistaken. The business constantly evolves and moves forward, and these artists should too.
The major record labels are adamant about keeping the price of a music streaming subscription at $9.99 per month, regardless of the platform, so it was a great surprise last week when Amazon announced that its new Amazon Music Unlimited service was priced at $7.99 per month for Amazon Prime members. It turns out that the labels haven’t softened their pricing stance at all, as Music Business Worldwide reported that Amazon will actually end up subsidizing the other 2 bucks when all is said and done.
It turns out that Amazon is expected to be paying out from between $5.50 to $6 each month to record labels and artists for each $7.99 Prime subscriber, and an additional $1.50 a month to publishers and songwriters. When you figure in administration, marketing, staff and infrastructure costs, that means that most if not all of that monthly fee has pretty much been eaten up.
So what’s the company’s end game?Amazon might be pulling an Apple here, losing money on software in order to sell more hardware and make a much higher profit. While Echo and Dot seem to be hits and are the leading products in this new category, there very well may be more hardware devices from the company on the way . Using music streaming as a loss-leader to make it’s hardware more attractive has been tried by many companies though, particularly in the mobile space, and only Apple has been wildly successful with the strategy.
The price subsidy could also be another way to increase Prime memberships. While Amazon doesn’t publish the actual number of subscriptions, insiders have reported it to be around 60 million, and when you consider that each one is paying $99 a year for the privilege, you can see why anything that might increase that number could be valuable. Still, it seems like a stretch to think that the average music user will say to himself, “I really want to subscribe to this music service because of this great price. Let me pay just $99 more so I can buy in.” [Read more on Forbes]
Amazon has finally launched it’s long awaited stand-alone streaming music service and it’s called Amazon Music Unlimited. On the surface it has a number of interesting features that differentiate it from the other major streaming services, but one has to wonder whether potential users will find them compelling enough to subscribe.
Perhaps the service’s biggest feature is price. If you’re already an Amazon Prime customer, Amazon Music Unlimited is available for just $7.99 per month or $79 per year, undercutting the norm of $9.99 per month charged by most other services. If you’re not a Prime customer however, you’ll still be charged the customary $9.99 per month.
If you happen to own an Amazon Echo, Echo Dot or Amazon Tap device, the price is even lower at $3.99 per month, but music playback only works on that device. If you want to receive the full Amazon Music service on your phone, for instance, you’ll still need to pony up for the full Unlimited tier at either $7.99 monthly if you’re a Prime member, or $9.99 if you’re not.
On the surface this seems pretty interesting in that a lower price for streaming is what major industry consultants have been advising for years. Even back at the peak of the CD boom, the average music buyer never purchased $120 worth of music per year, as is the case now with a $9.99 per month streaming plan. Though there’s been a decent amount of streaming penetration at that price point, it’s still only 10% or less in some territories, according to industry pundit Mark Mulligan. Potential subscribers that might not ever buy at $9.99 are more likely to change their minds if that monthly threshold was lower.
That’s why Amazon Music Unlimited’s $7.99 per month price point looks so inviting. It’s a step in bringing that monthly fee more in line with the expectations of the greatest number of users.
The problem is that this price is really a mirage.
You have to be an Amazon Prime member in order to have access to the $7.99 price, and this is after you’ve already payed $99 for your Amazon Prime subscription for the year. And, as a Prime member, you already have Amazon’s Prime Music service available to you for free, so why would you want to pay the extra 8 bucks a month for something that you’ve already paid for?
To be fair, Amazon Music Unlimited is different from Prime Music in a number of ways. There are a lot more songs available (Amazon will only say its in the “tens of millions” as compared to Prime Music’s two million), there are curated playlists, behind-the-scenes artist commentaries, and a new app. Is that worth the extra money per month? It will be interesting to see just how many of the estimated 60 million Prime members say, “Yes it is!” [Read more on Forbes]