New Experiences Like Video And VR Can Save Streaming Music
While streaming services continue to announce seemingly impressive subscription numbers, consumers continue to gravitate more strongly towards visual experiences, meaning that integrating video and things like virtual reality tech, will be more and more important to platforms like Spotify and Apple Music.
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Guest Post by Bryce Clemmer, CEO at Vadio
Every six months or so, music streaming services announce updated subscriber numbers, and they always sound impressive at first. Spotify is at thirty million; Apple Music at 10 million; even the much-maligned Tidal is clocking in at the 3 million users, although it remains to be seen how many of those stick around after listening to Kanye West’s new album. But compare those numbers to Netflix, which boasts 75 million subscribers at last count, and it becomes clear that video is seen by many as a much higher priority, and is worth far more in the consumer mind than streaming audio alone.
The trend is continuing toward more visual experiences, too — the hottest topic in the tech for the last several months has been Virtual Reality, which allows users to experience immersive visual and audio worlds. It won’t be adopted by the mainstream for a while, but the direction is clear, and pretty soon, just providing audio won’t be enough to keep users interested.
Even now, music video streams are already more popular than streaming audio, and that trend is only growing. One of the biggest problems streaming music services currently face is that it is very hard to tell them apart from one another — they all have virtually the same catalog, along with curated playlists and recommendation features. Given platforms can’t really compete on price, adding quality video is a differentiator — adding video content has the potential to lead to a platform becoming a user’s primary entertainment destination.
Inherently, video has a higher perceived value than audio; since the dawn of cable, people have shown a willingness to spend more on video than audio on a monthly basis, and how we justify the expense for different forms of content is different — that’s why plenty of people subscribe to multiple video services (Netflix, Hulu, HBOGo) but few to multiple streaming services.
In terms of advertising, video monetizes far better than virtually all other forms of advertising — the average CPM for a video ad is $15-25, while the average CPM for an audio ad is $8-12. For streaming services that have free tiers and want to keep them, growing ad revenue can easily occur if video gets integrated into the platform. For paid tiers, video will keep users in the service longer because video is inherently more engaging.
Adding video also allows fans to make a deeper connection to the artists and the service. Simply offering audio means that people generally listen while doing something else — cooking dinner, jogging, or working. Having a service run in the background means users are less engaged, and it creates a friction point when they hear a great song and want to learn more about an artist. Adding video will make streaming services a first-screen experience, allow fans to experience the artist and their work more deeply, and unlock greater revenue opportunities.
Some streaming services have started to venture into video. Spotify launched a platform that features clips from the Daily Show and other outlets and Tidal did some deals for original content. Both are solid initial efforts, but streaming services need to pick up the pace and start incorporating much more video. YouTube is the largest music destination in the world for a reason. If the streaming services continue to be audio-only, they risk getting relegated to background noise, and as time passes – potentially forgotten by people.
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Bryce Clemmer is the CEO and co-founder of Vadio, the leading music video distribution platform for media companies and brands.
“Inherently, video has a higher perceived value than audio; since the dawn of cable, people have shown a willingness to spend more on video than audio on a monthly basis, and how we justify the expense for different forms of content is different ”
So how can the music industry learn from this, to create a higher perceived value for music itself, without the crutch of video?