“Every new industry has a number of similar patterns which occur over time. Rapid growth followed by consolidation seems to be the norm,” Kate MacKenzie writes for PixoBebo.Occasionally, a newcomer might remain as a major player, but often they get swallowed up by larger companies with deeper pockets, or slowly diminish into a niche player.”
In streaming music, “thanks to major competitors, including Google Play Music and Apple Music, the consolidation and pruning stage has begun. Spotify and Pandora are toast,” MacKenzie writes. “Spotify isn’t making money. Google and Apple’s music services may not be making money, either, but it doesn’t matter because music is not a core business for either, and both have deep enough pockets to lose money on streaming music for years. For Spotify, music is the lifeline, and current contract terms means the company cannot make enough money to survive, so it wants to renegotiate terms with music companies. Meanwhile, the music companies want a bigger cut of Spotify’s growing revenue (which, thanks to Apple Music and more competition, is not growing as fast as it once did). Spotify wants to pay less, music companies want more.”
“Pandora’s situation is worse,” MacKenzie writes. “With the exception of Apple Music, growth in streaming music services and internet radio (including Pandora) has begun to slow, and that means the handwriting is on the wall. The end is near.”
Read more in the full article here.
MacDailyNews Take: Yup.
Simple mathematics makes it blatantly obvious what going to happen to Pandora. — MacDailyNews, September 24, 2013
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Apple Music has rendered Spotify’s future decidedly dimmer.
The best customers are those who pay. As demonstrated by years of data, form disparate sources, those paying customers are also significantly more likely to be iPhone owners than those who’ve settled for poor iPhone facsimiles. A healthy portion of these coveted customers will leave for Apple’s comprehensive offering which offers better family rates, more music, likely exclusives, and seamless integration across all Apple devices. It’ll even work with crappy Windows PCs and Android phones eventually (not that those are likely to be Spotify’s paying customers, but whatever, some of them will join Apple Music and maybe even graduate to Apple devices because of it).
Spotify could quickly be left with an unprofitable system, with a dwindling music library because they cannot afford to pay music royalties. — MacDailyNews, June 9, 2015
SEE ALSO:
Apple Music complicating Spotify’s attempt to contract with all three major music labels – August 23, 2016
Apple’s App Store anti-competitive? Spotify and Elizabeth Warren think so – July 15, 2016
Elizabeth Warren accuses Apple of monopolistic-like actions; Spotify concurs – June 29, 2016
Apple Music accumulating subscribers much more quickly than Spotify or Pandora – June 21, 2016
We know the RIAA vampires want the streaming music services D.E.A.D. They’ve been hanging on the neck of Pandora for years.
…Current contract terms means the company cannot make enough money to survive…
That’s the idea! Charge exorbitant royalty fees with the object of assassination.
And no, the RIAA is NOT doing all this for the benefit of their artists. They just want money for themselves. From 10 years ago:
RIAA PETITIONS JUDGES TO LOWER ARTIST ROYALTIES
Aggressively litigious group has claimed to protect musicians in the past. Now believes musicians deserve less for “innovative” music distribution.
The language of this statement reveals a great deal about who the RIAA is looking out for, and it’s not artists. Couched in terms of apparent necessity, the RIAA’s is insisting that the real musicians be paid less so that the record companies can continue to “drive revenues.”
What I’m for: Any Internet service that allows me to learn new music. I’m rarely going to learn about anything decent from utter crap land based corporate radio. Therefore, thank you to all music services that offer some/any way to hear something NOT corporate sanctioned. ALL of my favorite modern music is NOT played on the radio.
On the other hand, when I hear something I like I BUY IT. Renting music makes zero sense to me. You miss a month’s payment, oops all your tunes are GONE. That’s ridiculous.
Shut up punk. I will end you
“The music companies loved the idea of subscriptions because they wanted to jack up the price every year. It was a money-driven thing, some finance person looked at AOL getting paid every month and said, ‘I’d sure like to get some of that recurring subscription revenue. Wouldn’t that be nice?’ It was certainly not a user-driven thing. Nobody ever went out and asked users, ‘Would you like to keep paying us every month for music that you thought you already bought?’ We told them, “Nobody wants to subscribe to music. They’ve bought it for 50 years. They bought 45s, they bought LPs, they bought 8-tracks, they bought cassettes, they bought CDs. Why would they want to start renting their music? People like to buy it and they like to do what they damn well please with it when they buy it”. The subscription model of buying music was bankrupt. I think you could’ve made available the Second Coming in a subscription model and it might not have been successful.”
Steve Jobs: The Unauthorized Autobiography
I’m not sure that they are correct when it comes to Pandora. Pandora has paid services for businesses which provide music with all ASCAP fees paid. It is in conjunction with Mood Music (Muzak). Pandora could scale back their noncommercial offerings and have a profitable operation if they needed to.
No they couldn’t.
Pandora is a great music service. I hope it doesn’t go away. Apple music sucks and is far too expensive as far as I am concerned.. and I love most everything Apple. I hate the fact that Apple did away with there FREE music stations in iTunes. I have been buying and will continue to buy Apple computers, iPhones, iPods,iPads and so forth but I hate the music subscription service.
Couldn’t agree more. I tried Apple Music for the promo period. Discovery was egregious.
I discover, then buy – CD’s (except EPs) GASP!!!. Why rent?
Pandora has exposed me to some great stuff. Love it!
Spotify is great for exploring albums.
Trigger warning (you asshats), Apple is not great at everything, services foremost.
Steve has argued, very vocally, against subscription / renting, and I had agreed with him on that, quite vocally as well.
Having been an Apple Music user for a year now, I have come to understand the quite remarkable and surprising benefits and advantages of subscription.
I am in my 50s, I have some 300 CDs, accumulated over the decades. Before that, I had some 50 LPs, most of which have been re-acquired as CDs. And terein lies the first problem. We like to argue that, over the years, buying music is a much better deal than renting it, because we listen to our music over and over, and when we buy an album, it is with us forever. Unfortunately, that isn’t quite that simple. Yes, you buy your album in whatever is the most widespread sound carrier format of the day (LP, 8-track, audio cassette, CD, MiniDisc, DCC, iTunes, whatever), and theoretically, that album will be playable for the rest of your life (on the device you had used when you bought the album, or any subsequent replacement that is still compatible). In reality, while I still have those LPs, it has been over 20 years since I had last touched them. Even if we disregard for the moment the inferior audio quality of the vinyl, it is the hassle of the whole concept, the fragile tone arm and sensitivity to dust of the vinyl record that made me simply move the turntable and the vinyl collection to the storage boxes. At this point, my CD collection is still in my living room, but even that one is now largely collecting dust, since Apple Music has literally every track/album I had ever bought on LP or CD. And millions more.
The thing is, for people born in the 50s and 60s, the story is actually quite familiar, and has been distilled into a saying “So I now have to buy the White Album all over again!”. The White Album being the Beatles’ double studio album of 1968. As new formats became dominant, it was released on 8-track, compact cassette, CD and, a few years back, on iTunes. These consecutive re-releases didn’t make any prior ones obsolete or defective, but as most people decided to migrate to new technology (for various reasons, two most common being convenience and audio quality), they kept re-purchasing their favourite music in new formats.
The point here is, a physical format for commercial recorded music, while technically immortal, has a certain shelf life, beyond which most people end up migrating to newer and better technology. In my case, I now have a 300-album CD collection, 50 or so of which were purchased twice (first as LPs). Many people of my age are in a similar situation.
For people like me, renting music may well be financially more advantageous than purchasing it, when the medium is likely to be made obsolete over the next 30 years. If you are one of those music fans who buys several albums in any given year, then spending $10 per month on the music subscription gives you access to all the albums you could possibly buy in all of your lifetime, and you get it right away, rather than spread over decades.
For fans of jazz or classical, one other major benefit makes the subscription model priceless. I can compare twenty different recordings of Mahler’s Fifth Symphony, if I want; or of Rodgers and Heart’s “My Funny Valentine” (Ella Fitzgerald, Frank Sinatra, Sarah Vaughan, Etta James, Chaka Khan, Miles Davis, Elvis Costello…). All this stuff is there, I can download and play offline, or stream via WiFi/4G, and $10 per month is a pittance for this massive trove of treasure.
While I agree that all independent music sub services are toast – they’ve always been, as there’s never been one that made money, Spotify has seen its paid subscriber base grow faster after Apple opened its own service. So, let’s get that correct.
Ask any musician, any one but the top 100 rap and pop stars how their streaming checks look monthly. I did its pennies. Very sad.
But does the streaming provide marketing of their music, resulting in higher sales? That’s a figure I want to know.
Geez, didn’t we used to hate on Microsoft for using their financial power to crush good businesses?
I like Pandora, and would hate for Apple to drive them out of business.