Prediction: Apple, Google Finally Launching Subscription Services Will Be A Game-Changer
By David Dufresne (@DavidDufresne), CEO of Bandzoogle, a website builder and marketing platform for independent music artists.
I think when Apple and Google finally launch subscription music services (or partner up with an existing one), and bundle them with each iOS and Android device sold, this will be a huge game-changer. It will definitely be the tipping point towards massive adoption of on-demand music access, and it will accelerate the downfall of music ownership.
"As soon as streaming becomes the leading way people consume music, it will highlight the issues surrounding revenue and business models for everyone involved and really pave the way to a new era — for both good and bad."
It will obviously impact the current providers (Spotify, Rdio, Deezer, etc.), but as soon as streaming becomes the leading way people consume music, it will highlight the issues surrounding revenue and business models for everyone involved (artists, labels, tech companies) and really pave the way to a new era — for both good and bad.
All the stakeholders will be forced to look hard at their business and understand the new market rules at play. Some will have to give up or pivot their businesses (and the bigger you are, the harder it is to achieve that…), but others will be able to either build a sustainable business around streaming, or use it as leverage to create businesses around the experiences made possible by streaming services.
"Once smart, creative and connected people measure
their performance by something else than number of
sales, they’ll start working on replacing the main old
model by a diverse number of new models."
Hopefully a lot of the efforts and creativity that have gone into sustaining a “sales of recordings” industry for years will go after new these business ideas and revenue models. Once smart, creative and connected people measure their performance by something else than number of sales, they’ll start working on replacing the main old model by a diverse number of new models.
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This is David Dufresne's response to sidewinder.fm's question:
What is a major event that you believe will transpire in the coming months? Why does this specific event hold significance to you? How do you think this event might impact the larger music industry?
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David,
How would the economics work between device maker (Apple) and Rights Holders under a model where the service was bundled with the device? Wouldn’t the device maker be forced to payout to the rights holder every month while collecting from the consumer only one time up front? Won’t that create challenges to this model?
Seems more likely that the carriers (AT&T, Verizon) would bundle the service with their service, so that the payouts to rights holder match the subscription income from the customer. Think about Muve Music success story.
Interested in your thoughts.
I think David is right spot on. This is a waiting game and the infrastructure players can afford to sit back and let the VCs spend their money trying out different interfaces and subscription models, and when the money is gone, they will scoop up the best technology and either use it or kill it. It’s hard to see Google challenging Apple successfully on streaming music – they have the existing huge paying customer installed base with iTunes, they know mobile customers well, they know tablets, they have great software engineers.
Unless they are thwarted by the labels through overly onerous licensing structures, it’s their race to lose.
Apple or Samsung can include their streaming apps on all devices with no financial costs but to bundle it would need the network operatorsif you define bundle as download costs free as part of your deal.
One problem For me – Streaming would have a negative revenue impact on their download businesses so why would they push streaming?
Theoretically a game changer but many open issues still
When analyzing the whole stream subscription model, experts always seem to overlook the role of the internet access providers. Over here in Germany, the largest IAP, Telekom, has threatened/been rumored to change all the flatrate contracts with their clients into download-on-demand at an unspecified date in the not-so-far future because with as many heavy users on flatrates, the IAP’s calculations for the flat rate prices don’t add up to a profit anymore.
And who in their right mind would pay the difference between the flatrate and the megabyte-on-demand price merely for entertainment purposes?
I still believe in physical ownership of recordings because this way, I don’t need a middle man to get access to “my” content.
Hey Jed,
I’m no expert, but I assume the economics would be similar to the deals that rights holders have in place with Spotify and others, and based on pay per stream fees, independent of wether the service is free, freemium or paid. The main difference is that the app would be pre-installed (part of the iPod feature) and iTunes or Play users automatically signed up.
Maybe in Android’s case some carriers would bundle a monthly sub. You’re right that maybe in that situation the deal with rights holders would be different. I’m surprised we haven’t seen more packages like Muve Music, so I don’t know if it’s a success story for all stakeholders.
“One problem For me – Streaming would have a negative revenue impact on their download businesses so why would they push streaming?”
True and that’s definitely one main reason why we haven’t seen it yet. Solveig’s comment above says it. Apple is being patient and will launch a service once it sees that there’s risk of a critical mass leaving the “iTunes-iDevice” for Spotify and others, and impacting their download sales revenues and competitive position. Google is nowhere near that position, but it’s Google… and Android.
That said… Youtube = Google, so maybe Google can be somewhere near that position…