MUSIC BIZ 2015: ON THE RECORD, PART 2
It's time for the second round of answers to our Music Biz 2015 "On the Record" question, from an array of sales, distribution and digital folk (you'll find part one here). Just to refresh your memory, here's the question again:
“In the past year, there has been a lot of discussion regarding the cannibalization of digital downloads by streaming services. Do you see a way in which downloads (and physical retail) and streaming can coexist and even benefit one another?”
Scott Ackerman, TuneCore
Streaming services have proved to be excellent vehicles for discovery of new artists and new music. Artists now have even greater opportunity to get their music heard by more people in more places, which translates to earnings from both streams and sales. On TuneCore, the success independent musicians are seeing from the combination of downloads and streams is evident in on our 2015 Q1 earnings: Artists have earned more than $36 million, a 5% increase over the same time in 2014. Those earnings were driven by 2.8 billion downloads and streams.
Peter Szabo, Shazam
I have this conversation quite a bit. Streaming partners tell us, “As soon as people realize that for $10 a month you have all the songs in the world in your pocket, we’ll sign people up in droves.” The challenge is, it isn’t a logic-based argument. The “It costs less than three cappuccinos” argument doesn’t hold up; there are too many legal, free options right now that are good enough. I think the streaming companies are going to have to show users the true value of what they get for $10/month to win more paying customers. As streaming companies get better at offline players, and further integrate into cars, I think that will help them.
Joe Armenia, Rdio
Streaming services provide unparalleled discovery options that allow users to expand their listening and become fans of artists they may not have otherwise known. Music fans will always continue to support their favorite artists and purchase their albums, whether physical or digital. Streaming provides another avenue for them to find these artists, similar to finding a new artist through listening to the radio, but in a more curated and personalized manner.
Gary Kelly, Interscope
The death of the download has been somewhat exaggerated, and while the trend is showing softness in tracks, album downloads have held up. Obviously, we are transitioning to where streaming is the dominant format. When you look at churn rates of streaming services, a case can be made that there isn’t a model that fits all consumers. I can see a world where discounted albums and tracks exist for consumers who are on premium services as a special incentive. How big is the consumer’s appetite for a mode like this? It’s difficult to say, but there will come a point in time where experimentation will exist with those companies that have download and streaming services, and they will try different things to grow ARPU. You can look at the companies who live in this space now (Google, Amazon) and their internal access to data that shows them who is streaming and purchasing digital (and physical at Amazon). Time will tell, but the exciting thing is that there is a blank canvas out there for testing new models. And if we all start with what the consumer wants/needs, we will innovate and create models where the two channels can work together.
Jay Frank, DigSin
Streaming and downloading are already coexisting well, and we are benefiting greatly from it. We’ve had records with no radio get added to major Spotify playlists, and we immediately see download sales increase. When the song gets dropped from the playlist, download sales go back down. Having seen this occur multiple times, it seems pretty clear that we have a healthy future to look forward to with both formats.
Dilyn Radakovitz, Owner, Dimple Records, Sacramento
Music is more multidimensional than ever before in today’s world. Streaming and digital services are just another way for folks to hear what they want quickly, and they can purchase their choice. If customers want to test the waters with streaming and digital services in music, movies and books, they have that choice. The artist of today cannot depend on just one form of delivery for product; neither should they depend on one kind of promotion to reach their fans; they have to be versatile. If the physical piece they produce is compelling to the fan, then it will be purchased. It’s up to each artist to know their customer, and to create a physical product that will entice that customer to want to be a part of that experience. At Dimple, our best consumers want it all: they download digital files, stream and buy physical product. Let’s try and keep these folks happy!
Terry Currier, Owner, Music Millennium, Portland
Streaming services are serving music fans much in the way radio once did in turning fans on to music—but terrestrial radio has been pushing most music away for years. Whereas downloading cuts into physical sales of recorded music, streaming services do far less to detract from physical business. In fact, streaming music inspires many listeners to go down to the record store and buy the physical product, especially vinyl enthusiasts. And as vinyl sales continue to grow, these two mediums look like they can live much more happily together than downloading and physical product could.
Ken Gullic, eOne
Sorry, what was the question again? I’ve been too busy thinking of another unforced error the music industry can thrust upon itself... Did somebody say Fridays?!?
