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A blog post

The Skinny on Music Subscription – To Earn or Not to Earn?

Posted on the 28 January, 2012 at 9:35 pm Written by in Blog, Digital Music Business, Trends

I saw an interesting article the other day on TheVerge.com and at first, I was wondering, what is “The Verge” and why is it in my RSS reader?  Then I remembered that it was a start up media platform focused on tech that I read about late last year and decided to start following.  Turns out, that was a good idea.  They discussed the “Homecoming Queen” of today’s music industry, subscription music streaming services, with an investigation of whether or not there’s actually real money there for artists and labels.  I’ve worked on a few subscription music streaming deals in my day, and my opinion is that there could be money for the industry in this space, but not just for subscription streaming alone.  I’m not a fan of the access model.  Plain access is not a money-maker.  Why?  Because YouTube already does it for free, and better than every audio-only subscription service available.  They don’t want to say that, but it’s true.

What do I think that customers will pay for?  Expertly-curated passive listening.  I’m not just talking radio, because radio already does radio, for free.  What people are looking for is the right mix of discovery and familiar, plus no-work-required hours of seamless passive musical enjoyment.  For this reason, of the options, Spotify, Pandora, Rhapsody, etc., I’ve always been the biggest fan of MOG – just waiting for them to get their user interface right.  One thing they have done better than others is worked out their programming, their lean-back listening experience algorithm.

The train has already left the station on access, so what’s next?  Spotify is working on their radio experience, but shouldn’t that be a core product?  I mean, who really wants access to all the world’s music without knowing what to do with it?  I can’t even get my gym playlist right for a 45 minute session on the treadmill.  There are a lot of out-of-work radio programmers and music magazine editors.  If I was in charge of Spotify, or Mog, or Pandora, I’d be snatching them up like hotcakes to work with my programmers in perfecting my passive listening experience and site editorial.

Funny enough, when I was in Paris last summer, I met with the lovely folks at Deezer, Alex Dauchez and team.  Despite their licensing troubles, they have something very interesting.  At the time of our conversation, more people were using their platform in France than were using iTunes.  That’s major.   What was the difference with this music subscription service?  EDITORIAL!  Deezer has the music catalog, but has put major money and focus behind their editorial, making the site feel more like a music discovery community and resource than anything else.  A tastemaker, rather than just a pool of audio files.  And their consumers love it.  Their model of optimizing for mobile handsets, working with the smaller markets and playing the market aggregation game works.  They’re not in the US yet, but other players should be taking notes.  This is how you do subscription.

And so this brings me back to the original question.  Can labels and artists really make money with music subscription services?  Nope.  Not unless there’s some kind of push to your content.  So you win if you have a big catalog or name recognition.  But if you’re a baby artist, or a label with a small catalog of only minimally popular songs, you’re kinda toast.  Unless, there was some kind of spectacular programming and editorial that ensured that good, unknown music gets played.  So, consumers decide to pay, and baby artists get enough plays that they actually see a fraction of the royalty pool.  That’s the win in my book.