Music industry in a spin! / 11th Feb '10

streaming music

So the debate about free music is buzzing again since Warner hinted yesterday that it may pull its catalogues from free music steaming sites such as Spotify, after declaring such services were “clearly not positive for the industry.”

Going back to a time before free streaming; the consumer purchased physical music that then became digital. And with that came the age old problem of piracy – a battle the music industry has fought ever since.

As an answer to illegal downloading, in recent years we’ve seen a soar in free music streaming services like Spotify and Last FM. Record labels have had to get involved due to this huge route to market. Adverts via these portals mean consumers can be targeted directly, but a premium paid for services means the listener gets to ignore the ads.

So along came the Subscription model. It’s not just music to be consumed through this model either, as ticket sales and merchandise generates revenue and exposure. But the issue here is that the supplier – the label – has to agree for its music to be made available, if they want their slice of the profit.

So what happens if the label decides to pull out and not to license its music to these streaming services like Warner has suggested it may do?

Warner’s label chief executive Edgar Bronfman has already said it “Is not the kind of approach to business that we will be supporting in future.”

This will not be a good move for Spotify, Last Fm, We7 etc., but maybe this is just the spin the industry needs.

It begs the question whether Spotify will continue to give the label a share of the existing subscriptions. After all, the seven million users Spotify has in six European countries are not to be sniffed at.

Does this mean the labels will stick to the iTunes model, but with a subscription service? Will all the major labels come together and decide to pull out of free streaming services all together?

There has been so much debate in recent years about how artists and everyone else in the music food chain will actually earn money in the industry. Maybe this is it. I feel another change coming on…

dave@pokerpr.co.uk

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