AbsolutePunk.net
   Username
Password
 
Streaming News
Have a news tip? Submit news.

Value Added Streaming

Posted by - 02:09 PM on 10/25/13
Kristin Thomson's article "Value Added Streaming" is a really well thought out piece on the future of streaming services.
As an advocate for musicians and songwriters, Id like to see an increase in (a) audience size, (b) number of streams and (c) the payment per stream. But I also know that the per-play rate for on-demand streaming services was set through private negotiations between the platforms and the biggest record labels in the world, and that individual musicians (unless you are as powerful as Metallica or Pink Floyd) have almost no leverage over that (c) per-play rate.

On-demand subscription is still a crowded marketplace, currently represented in the US by Spotify, Rhapsody, Rdio, Cricket/Muve, Slacker and Google Play. Then there are the non-interactive services: Pandora and Sirius XM. And the new hybrid: iTunes Radio. And the upstart: Beats. And the elephant: YouTube. Not all of these will survive, as most of these really, really, really need to grow their user base in order to turn a profit.

Heres a bold prediction: The winning music services will be platforms that satisfy users and musicians.
 
Displaying posts 1 - 9 of 9
02:22 PM on 10/25/13
#2
jpmalone4
Avoid Eye Contact Monthly
Offline
User Info.
jpmalone4's Avatar
I really like what she says about giving artists more access to data. It's always interesting to see where some bands are really popular and where they're not, and I think something like that would really help bands plan tours more efficiently. Although I think it'd be cool if users could access some of that info too. Solid article.
02:41 PM on 10/25/13
#3
incognitojones
http://auburn-hills.tumblr.com
Online
User Info.
incognitojones's Avatar
I don't think there is any conceivable way for these streaming services to turn a profit.

My ideal service would not be run through labels or be a pay based models, you just upload your own music, as an artist, there are ads on the side, and you get paid through ad revenue. The odds of any of these services getting a large enough subscriber base to forgo using ads as a revenue source are so low, and then the artists won't be getting fairly compensated anyway. Its gotta be through the actual artists and based on if they're getting played, and I'm guessing a lot less streaming based and more download based.
02:50 PM on 10/25/13
#4
Jason Tate
Online
User Info.
Jason Tate's Avatar
I don't think there is any conceivable way for these streaming services to turn a profit.
Hmm, this I definitely disagree with. You don't even need that giant of a user-base to turn a profit if you can manage a few of the other costs, there are a variety of revenue models available.

My ideal service would not be run through labels or be a pay based models, you just upload your own music, as an artist, there are ads on the side, and you get paid through ad revenue.
Given the insane backlash we see anytime any service adds ads (did you see instagram yesterday?) I don't think this is great for the user. Furthermore the CPM on something like that, so that the artist, or service, would be profitable -- would be very, very hard to manage. I would bet, just doing off the top of my head math, that the rates would be even lower than the per stream model currently in place. Also, I can't think of many high-quality advertisers + their money that would want to advertise around smaller garage bands.

The odds of any of these services getting a large enough subscriber base to forgo using ads as a revenue source are so low, and then the artists won't be getting fairly compensated anyway. Its gotta be through the actual artists and based on if they're getting played, and I'm guessing a lot less streaming based and more download based.
Not really. Google and Apple have basically already done it. The combination you need is to scale in a way to make a variety of entities money, and add value to all three: company, bands, user. We're not there yet ... but I believe we can be.
03:11 PM on 10/25/13
#5
incognitojones
http://auburn-hills.tumblr.com
Online
User Info.
incognitojones's Avatar
Hmm, this I definitely disagree with. You don't even need that giant of a user-base to turn a profit if you can manage a few of the other costs, there are a variety of revenue models available.
Let me correct myself, profit not at the expense of the artist. Even then I think most of these services will struggle to maintain themselves long term. And how long before artists get sick of get like 16 bucks for millions of plays? This is not a long term source of profit for musicians, and I don't think they're really focusing on making it profitable for the artist.


Quote:
Given the insane backlash we see anytime any service adds ads (did you see instagram yesterday?) I don't think this is great for the user. Furthermore the CPM on something like that, so that the artist, or service, would be profitable -- would be very, very hard to manage. I would bet, just doing off the top of my head math, that the rates would be even lower than the per stream model currently in place. Also, I can't think of many high-quality advertisers + their money that would want to advertise around smaller garage bands.
I think ads will become the standard for similar services in the future, and even with some backlash people will just have to get used to them. There's really just no other way to generate actual substantial revenue without advertising in a model like this. The alternative, just illegal downloading for free, is full of ads. If people are willing to have ads on their download sites that create no revenue for the artists, I think they'll be able to put up with them if the artists are getting a piece, even after some initial backlash.

And I don't think anyway you cut it will have small garage bands really getting paid. That's just not happening.


Quote:
Not really. Google and Apple have basically already done it. The combination you need is to scale in a way to make a variety of entities money, and add value to all three: company, bands, user. We're not there yet ... but I believe we can be.
We're definitely not there yet, Apple's gotten the closest of anyone, and that's because the actual music on iTunes doesn't really drive their profits. People can just download illegally and take profit from the artists, but they're still buying the iPods and iPhones to play the music on, so Apple wins no matter what. Genius system put in place at the right time that allows them to profit from both illegal and legal downloads in a lot of situations.

Google I think can do better, we'll see. None of these services are there yet but this is a transitionary period that took way too long to actually reach in the first place. Could be five years, could be ten or twenty. Its all pretty much up in the air for anyone who wants to figure out how to make everyone happy by getting music out there.
03:15 PM on 10/25/13
#6
zachff
deadformat.net/tradelist/zachff
Online
User Info.
zachff's Avatar
Hmm, this I definitely disagree with. You don't even need that giant of a user-base to turn a profit if you can manage a few of the other costs, there are a variety of revenue models available.


Given the insane backlash we see anytime any service adds ads (did you see instagram yesterday?) I don't think this is great for the user. Furthermore the CPM on something like that, so that the artist, or service, would be profitable -- would be very, very hard to manage. I would bet, just doing off the top of my head math, that the rates would be even lower than the per stream model currently in place. Also, I can't think of many high-quality advertisers + their money that would want to advertise around smaller garage bands.


Not really. Google and Apple have basically already done it. The combination you need is to scale in a way to make a variety of entities money, and add value to all three: company, bands, user. We're not there yet ... but I believe we can be.

I enjoyed this piece and tend to agree with your points on feasibility but the whole exercise prompted this question in my mind: are we more or less resigned to music as this free, everyone deserves access mentality -- or this there some way to re-commoditize music again? I don't think I've read much (thought exercise or otherwise) in that vein. Any thoughts?
03:24 PM on 10/25/13
#7
Jason Tate
Online
User Info.
Jason Tate's Avatar
Let me correct myself, profit not at the expense of the artist. Even then I think most of these services will struggle to maintain themselves long term. And how long before artists get sick of get like 16 bucks for millions of plays? This is not a long term source of profit for musicians, and I don't think they're really focusing on making it profitable for the artist.
I disagree. For one, yes, like most markets there will be a consolidation of services. However, once one does survive, there are then more opportunities presented to monetize. Artists could be sick of it right now (although the profit is better than terrestrial radio); however, the idea they're going to return to selling music at the prices pre-internet is just a pipe dream. I would argue that selling music is not a long term source for profit for musicians, that that ride is over. You can't put the toothpaste back in the tube.

Quote:
I think ads will become the standard for similar services in the future, and even with some backlash people will just have to get used to them. There's really just no other way to generate actual substantial revenue without advertising in a model like this.
This doesn't address the abysmal CPM rate for most artists or actually generate enough revenue to be any real levels of profitability for anyone besides the absolute biggest artists in the world. There are other ways to generate revenue, as pointed out in this article and elsewhere on the FOMC pages. Putting ads on anything needs to work at scale ...

Quote:
The alternative, just illegal downloading for free, is full of ads.
The biggest torrent/free music sites don't have any ads?

Quote:
If people are willing to have ads on their download sites that create no revenue for the artists, I think they'll be able to put up with them if the artists are getting a piece, even after some initial backlash.
I haven't seen any evidence to support this line of thinking.

Quote:
And I don't think anyway you cut it will have small garage bands really getting paid. That's just not happening.
I believe there are a variety of ways you could work something out for small and medium sized bands. Tip jar, other revenue/affiliate sharing possibilities, and the like.

Quote:
We're definitely not there yet, Apple's gotten the closest of anyone, and that's because the actual music on iTunes doesn't really drive their profits. People can just download illegally and take profit from the artists, but they're still buying the iPods and iPhones to play the music on, so Apple wins no matter what. Genius system put in place at the right time that allows them to profit from both illegal and legal downloads in a lot of situations.

Google I think can do better, we'll see. None of these services are there yet but this is a transitionary period that took way too long to actually reach in the first place. Could be five years, could be ten or twenty. Its all pretty much up in the air for anyone who wants to figure out how to make everyone happy by getting music out there.
I don't think there is a situation where everyone will be happy.
03:27 PM on 10/25/13
#8
Jason Tate
Online
User Info.
Jason Tate's Avatar
I enjoyed this piece and tend to agree with your points on feasibility but the whole exercise prompted this question in my mind: are we more or less resigned to music as this free, everyone deserves access mentality -- or this there some way to re-commoditize music again? I don't think I've read much (thought exercise or otherwise) in that vein. Any thoughts?
I think by and large that's done. Right now 90% of most musican funds come from touring and selling other physical products (merch, etc.) -- I think that the idea of selling just music at a large margin is effectively done, and we're not going to see that change. I think that there are still plenty of ways to support artists though and those are the solutions I think we should be looking into ... which is why I like where this article was going.
03:49 PM on 10/25/13
#9
incognitojones
http://auburn-hills.tumblr.com
Online
User Info.
incognitojones's Avatar
I disagree. For one, yes, like most markets there will be a consolidation of services. However, once one does survive, there are then more opportunities presented to monetize. Artists could be sick of it right now (although the profit is better than terrestrial radio); however, the idea they're going to return to selling music at the prices pre-internet is just a pipe dream. I would argue that selling music is not a long term source for profit for musicians, that that ride is over. You can't put the toothpaste back in the tube.
Oh, no, this is totally not what I'm saying. Artists are never going to get pre-Napster money again, that's not happening, ever. But I don't think they'll be satisfied with this type of streaming service and look for other ways to just get their music directly to people without the middleman of a streaming service. The concept I think is the biggest problem.


Quote:
This doesn't address the abysmal CPM rate for most artists or actually generate enough revenue to be any real levels of profitability for anyone besides the absolute biggest artists in the world. There are other ways to generate revenue, as pointed out in this article and elsewhere on the FOMC pages. Putting ads on anything needs to work at scale ...


The biggest torrent/free music sites don't have any ads?
The streaming services aren't making any profits except for the absolute largest artists in the world either. There are other ways to generate revenue of course, and I don't selling music is going to be a main source of artist revenue again. But a system in place where artists are compensated through ads, cutting out the middleman of streaming services that also would need to get paid through ads, is at least a step in the right direction.

I don't use torrents, but the download services (mediafire, megaupload, zippyshare, hundreds of others) all do? At least did before I put on adblock.


Quote:
I haven't seen any evidence to support this line of thinking.

I believe there are a variety of ways you could work something out for small and medium sized bands. Tip jar, other revenue/affiliate sharing possibilities, and the like.


I don't think there is a situation where everyone will be happy.
I mean really there is no winning here. Music sales are going to keep falling, ad pay won't ever be really huge, streaming services won't really compensate the artists enough to make a huge difference, tip jars I guess is the best way to go and that's hardly something to rely on.

It all comes back to really one thing: the generation growing up now never really had to pay for music. Kids had Napster since they were born and anything they wanted to listen to for free somewhere on the internet. The future of releasing music is going to be heavily based on people expecting to get access to that music for free. There are different ways to monetize that access without paying directly, but nothing currently in place that is a long term solution to satisfying everyone involved.

For an artist these days the best route may be just releasing music for free, then making money touring and selling shirts or whatever. Worked for Chance the Rapper.

NEWS, MUSIC & MORE
Search News
Release Dates
Exclusives
Best New Music
Articles
CONNECT
Submit News
Forums
Contests
Mobile Version
AP.net Logos
HIDDEN TREASURES
AbsolutePunk Podcast
Free Music
Sports Forum
Technology Forum
Recommendations
INFORMATION
Advertising
Contact Us
Copyright Policy
Terms of Service
Privacy Policy
FOLLOW
Twitter | Facebook | RSS
AP.net Podcast on iTunes
UnderTheGun
Purevolume
Chorus.fm | @jason_tate