Ever since music streaming began in earnest, thereâs been a mantra inside the music industry thatâs gone something like this – âUntil the paid subscription rate gets to $5 per month, streaming is never going to scale.â Thatâs only partially been true, as subscriber numbers have grown steadily at the now standard $10 per month, but not to the level that the industry wanted or expected. The question is, will they truly take off even when they reach the $5 cheap tier?
It looks like we might know soon enough as Pandora is reportedly about to launch a brand new service at that magic price, with Amazon to follow shortly thereafter.
But is what you get for that $5 going to be worth it?
According to reports, Pandoraâs $5 tier is just another version of its other tiers, but with the ability to skip more songs and store several hours of playlists. And Amazonâs $5 tier will only apply to owners of its Echo smart speaker. That sort of limits the reach of these $5 tiers a bit, donât you think?
While all streaming services are feeling the pressure to reduce prices, theyâre bound by their agreements with the major record labels, which doesnât provide a lot of wiggle room for lower prices. In fact, itâs rumored that Apple wanted to set the price of its Apple Music to $8 at launch but that idea was quickly laid to rest by the major labelâs powers-that-be.
Pandora and Amazon dipping their toes in the $5 water could be a gateway to a new round of streaming discounts though. Whenever Spotify runs a sale (like the recent $3 for three months student special) its paid subscriber numbers rise pretty quickly, although itâs yet to be seen what the churn rate for those new subscribers is. Thatâs not enough evidence for the labels however, who still cling to the $10 per month price point as the floor that will never go lower. [Read more on Forbes…]