Spotify Continued…More Thoughts on Subscribers, Pricing and Value

Okay…is it just me, or are some people just ignorant of reality when it comes to streaming music? Maybe they intentionally choose an adverse position just to stir things up. Either way, to me, it’s pretty clear that some of their conclusions are just flat out wrong. There have been some pretty off-based, (in my opinion), articles on streaming published in the last few weeks.

I recently had my opinion on Spotify, and streaming overall, and how that relates to the future of music, published in Nekst.biz. In that, after analyzing some history and crunching some numbers, I concluded that the streaming of music for free is not a good idea for the future of music. Even though advertisers may support such activities, and give the ability for service providers of free streams to actually pay royalties to the creators, it doesn’t compare to what the value of music really should be. Now, I realize that’s a subjective opinion, but again, it’s one based on some market and historical data. (The full article can be read here: http://nekst.biz/spotify-music-is-valuable-paid/ )

In the last few weeks, I’ve seen other articles and opinions published which I just don’t get. For instance, Paul Resnikoff, whom I really respect and normally agree with, in Digital Music News, published a headline that said, “Taylor Swift Created The Biggest Subscriber Gain In Spotify’s History…”. The article opines that, by boycotting Spotify in November, Taylor caused Spotify to add 2.5 million paying subscribers in just two months, which is “the biggest growth spurt in Spotify’s history”. The article ignored, until others began to comment, that perhaps the real reason for the increase were special promotions Spotify ran during the Christmas season to encourage people to sign up, such as heavily discounted student and family plans, holiday gifting, and a 3 month for $.99 program to entice subscribers to join. Would it not be safe to suggest that the promotions, and not one artist’s refusal to allow her music to be available through the service, might be the real reason for growth? I’m having a hard time connecting the dots to how one artist withholding their music would motivate users to join that service to begin with. What am I missing? Is Paul suggesting that what Taylor did was beneficial, or a detriment? Maybe Paul was just throwing that out there tongue in cheek to see if people like me would react.

Another article by Mark Mulligan, in Music Industry Blog, suggests that the current, standard monthly price for a Spotify, (or any streaming service) of $9.99, is too much. He points to current statistics that “only about 10% of music buyers spend $10 or more a month on music (across all recorded music formats)”. He believes a better price point might be $4.99 per month, or at most $7.99. In my opinion, that seems to be pointing to the wrong things and pointing in the wrong direction. (See another NEKST blog post titled, “Which Way To Go?” http://nekst.biz/taxes-and-tunes-which-way-go/ )

As we will probably see, many, and perhaps most, of those new 2.5 subscribers who joined the premium Spotify service will likely drop the service after the 90 day $.99 period. Why would they want to pony up $10.00 a month when it’s so easy to get free, and legal, streaming elsewhere? If there are two steak houses side by side, and they serve the exact same quality of steak, how many would eat at the place that charges three times more just because they don’t have advertisements on the menu and walls, or maybe there’s no waiter who tries to upsell an add-on to your meal? Now, I realize there would be some takers. There always are those who want some type of exclusive or “club” experience. But the mass market will go for the same product at a cheaper price every time. Where and when the same goods are available, price will be the determining factor more times than not.

So how can we expect consumers to pay more than $10 a month for music when they can get the exact same stuff without paying anything? Well, not quite all the same stuff. Not Taylor Swift stuff. If you want her music, and you want to be legal, you actually have to go somewhere and pay for it. (Now, I know that whole “legal” argument is another argument in and of itself). As I said in my earlier article, around 4 million units of Taylor’s record later, she seems to have made some kind of good decision. Would she have sold that many units if her music was on Spotify? I’m going to guess the answer is “no”. What would have been the difference? No one knows. But not only did her decision sell more records, it also supported the whole idea that music has a greater value than most of the current industry recognizes.

I wish we could get others to catch on to that idea.

John Barker

© 2015 John Barker. All rights reserved. Information contained in this Blog is of a general nature and should not be considered or relied on as legal advice. Any reader of this Blog who has legal matters related to information addressed in this Blog should consult with an experienced attorney. This Blog contains no warranties or representations that the information contained in it is true or accurate in all respects or that it is the most current or complete information on the subject matter covered. John Barker is President and CEO of ClearBox Rights, LLC.

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