The music industry is in turmoil right now. Revenue is drying up at an alarming pace and the big names in the industry are doing everything they can to regain the sales that have been lost due to piracy and the advent of music streaming services. How far are music labels willing to take things to reverse this ongoing downward trend? According to one music industry insider who is certainly in a position to know, free streaming tiers from services like Spotify and YouTube may soon be eliminated, forcing users to pay if they want access to new music.
Just as there is no question that piracy impacted physical album sales as the world shifted to digital music, there is also no question that music streaming services like Spotify and Pandora have impacted digital music sales.
As we noted in our feature “Confessions of a music thief,” there’s just no reason to purchase music anymore.
For labels, this is obviously a bad thing. They earn far less from streaming royalties than they do from album sales, and as a result, we may soon see the complete elimination of free streaming tiers from popular services.
“Here’s the skinny… Jimmy Iovine and the major labels are conspiring to get rid of free,” music industry insider and critic Bob Lefsetz wrote in a newsletter late on Sunday. “Not only the free tier on Spotify, but YouTube too. Apple writes a check to the labels on 40 million subscribers for years, whether they reach that number or not, and everybody pays for music.”
According to Lefsetz, Apple is working with music labels to upend music streaming by ditching the free advertising-supported tier from all services and forcing consumers to pay. Logic suggests this would lead to a huge increase in piracy, but Lefsetz notes that the industry may be taking steps to prevent that by ultimately eliminating CDs and even traditional digital music files.
If we get rid of the aforementioned CDs and files. Renting an evanescent product, there’s [nothing] there. But as long as there’s a CD, as long as there’s an iTunes Store file, piracy will reign.
Is the music business willing to kill the CD and file?
Of course not, because they’re not in the business of taking big risks. Shut down YouTube and people will just use BitTorrent or IM or hard drive/USB stick to swap, assuming they want it at all. That’s what’s ignored, the promotional value of all these services. Who’s gonna check it out if they have to pay for it?
A lot fewer people.
Some will stick with Pandora. Back in the pre-internet era most people did not buy music regularly, radio was enough. Is everybody going to sign up for a music subscription?
Certainly not if there are files to transfer. But what if there are no files? Who is going to capture a stream and then transfer it? It’s doable, but a huge pain in the ass. Convenience argues for payment.
Lefsetz’s full newsletter is a very interesting read, and you’ll find it linked below in the source section.
FROM EARLIER: Confessions of a music thief