Subscription music services intrinsically unprofitable

“Subscriptions to music services are expected to more than double by 2017, but because those services pay 60 percent to 70 percent of their revenue to record labels and artists, the entire sector is intrinsically unprofitable, according to a new report,” Lucas Mearian reports for Computerworld. “The report, from industry analyst firm Generator Research, offered an analysis of the top services, including Pandora, Spotify, and Rhapsody.”

“The report states that unless the services can monetize their user base by entering new product and service categories, or they can sell themselves to a larger company that can sustain them, they’re doomed to fail,” Mearian reports. “Generator Research’s analysis shows that no current music subscription service can ever profitable, even if it executes perfectly, because the music industry will never agree to significantly reduced royalties.”

“One method that subscription services might be able to achieve profitability is to upsell mobile deals or bundles to subscribers. For example, a select package of mobile services would be sold through the music service provider, the report suggests,” Mearian reports. “Bundled services will likely begin to surface when the music subscription market reaches a certain critical mass. Then, users will see the arrival of a kind of ‘super bundle’ where, for an additional monthly fee, paid-for downloads, for example, would be bundled with the base subscription offer. ‘Services like iTunes Match and Google and Amazon are already heading in this direction,” Generator research states.'”

Read more in the full article here.


  1. I don’t do music subscription, don’t even know what it means. If I like a music using shazam for example I buy that 1 song through iTunes. If its a whole album, I check the prices in iTunes, amazon and our UK music store HMV or Fopp. iTunes and the shazam combo is the best for me

  2. This describes the Beats music service model with AT&T. For $9.99 per month a used has “Unlimited downloads and streaming*”.

    *Data rates may apply to downloading and streaming.

  3. Subscription systems like Spotify are fine if you live where there is always a strong network signal with good data, and you get unlimited data.
    Which means large urban areas. Outside of large urban areas, forget it.
    I have two phones on two different networks, only one allows unlimited data, but the coverage sucks, whereas the other, my main contract phone, has good coverage, but data is capped at 1Gb/month, which is useless for streaming; back before data-capping, I could blow through that in less than two weeks, and that was using the phone for around five-six hours a day, five days a week.
    All I want is an iPhone with 128Gb of storage, and a Touch with 256Gb.

  4. I have been using Spotify lately to re-visit some music I used to own on vinyl and, yes, cassette. I don’t care about these songs enough to buy them. I won’t be listening to them regularly as I do my purchased music. But it’s been fun to hear songs or albums I had long ago given up on ever hearing again, and with better sound quality than I ever achieved in my impoverished youth.

  5. I consistently find these music services to be hilarious.

    1) Masterminded by the brain-dead, 20th Century music biznizz that is determined to destroy itself from:
    A) Customer Abuse
    B) Customer Retrobution
    C) Luddite determination to do things WRONG in the 21st Century.

    2) These jokes of music rental NEVER work. Never did work. Don’t work now. Never will work.

    But BASH BASH BASH that same old bad idea on the customer’s head until they succumb. If at first you FAIL, FAIL FAIL FAIL again, because they’re lost in dreams of their parasitic past.

    Meanwhile, savvy musicians have abandoned these scam biznizziz and want nothing to do with them.

    FAIL FAIL FAIL again again again again…

    1. BTW: For the usual SCAM music biznizz apologists:

      I buy a hell of a lot of music. I don’t pirate music. My hatred of the SCAM music biznizz is for realz. Now STFU and change these rectal pore companies for the better, or kill them off, as they deserve.

  6. I suppose there are some people who will like the subscription setup but will there be enough to support the business? I like iTunes match because it is cost effective ($25), keeps my devices synced up for the most part and allows me to listen to iTunes Radio without ads. I couldn’t imagine paying $110 a year for renting songs. I would rather buy 100 songs and eland my library that way.

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