The cultural and economical impact of music streaming services has been one of the biggest changes to the music industry lanscape in recent years, as best characterised by the recent IFPI Digital Music Report that showed global music sales experienced a growth for the first time since the launch of Napster (that’s 1999 folks).
While more and more users sign on to the bevy of on-demand music services already available, there are even more on the way, such as the recently launched Songl, a partnership between Aussie network giant Southern Cross Austereo and label majors Sony and Universal, as well as Twitter, Google, Apple, and Trent Reznor manning Beats Music’s allegedly revolutionary ‘Daisy’.
Which means those who want in on the music streaming boom need something special to get the edge on their competitors, and particularly market leaders like Deezer and Spotify.
In fact Deezer CEO Axel Dauchez believes that before the end of the year, subscription based streaming services will be the death knell of the traditional music download.
In an interview with The Guardian, Mr Dauchez boldly claims “we see the end of music downloads as coming this year.” The Deezer CEO’s predictions are steeped in the belief that a change in conceptual thinking about consuming and marketing music will fuel the ultimate demise in music downloads.
Mr Dauchez elaborating that the death of music downloads would be “not in terms of volumes but in terms of the concept,” elaborating to say that: “It’s a point, for me, like five years ago when Gmail conceptually killed Microsoft Exchange. You couldn’t imagine having your emails stacked somewhere close to you any more.” “We see the end of music downloads as coming this year, not in terms of volumes but in terms of the concept.” Axel Dauchez, Deezer CEO
However, despite his bravado and marking of 2013 as a defining year, Mr Dauchez seems hesitant about the actual rate of such a change in the market; hastily admitting that he has “no prediction about the timing of the shift.” Dauchez making an interesting comparison to Apple:
“So many big interests are involved. For example, when will Apple have an interest to sacrifice its current model to move to the next one? Nobody knows.”
A fair point, especially considering the IT giant’s continued struggles in launching a music streaming service modelled on internet radio site Pandora, the latest stumbling block being criticised by record labels over their proposed royalty rates for the new service as being ‘way too cheap’.
Within their own managerial sphere, Deezer have taken the initiative to service more pressing issues, including a recent upgrade to their serviced technology. Particularly in the form of ‘Deezer For Artists Initiative’ (D4A) a strategy to extend the corporate hand to aspiring bands and artists, to initiate a dialogue or interactive platform in the hopes of drawing in fans to Deezer.
Mr Dauchez explaining that “we want to re-engage people with music, but you cannot do that without doing the same for the artists… We want to be serving the emerging artists, too, not just the big stars.”
With Deezer’s savvy reputation developed on the back of recently upgrading its API services to include a rewards scheme to its service to its 3 million paid subscribers across 182 countries worldwide, such proposals about evolutionary change in the market and intended movement in that particular direction could see the streaming service be chomping close at Spotify’s heels sometime soon- with “emerging artists” providing possibly subscribers with extra bang for their buck.
Coincidentally, or maybe because of Deezer’s closing of the gap in the market, Spotify are planning on conceptually evolving in another direction.
As reported by Business Insider, the top streaming music service is looking to branch out to video streaming, hustling the likes of Youtube, HBO, and Netflix who have been established staples in this sector of online media and entertainment consumption with Spotify reportedly seraching for partners to fund such an endevour and expansion. Their $3 billion value accumulated on the back of a $100 million investment from the likes of Coca-Cola and Goldman Sachs no doubt putting them in good stead for negotiations. The top streaming music service, Spotify, is looking to branch out to video streaming, hustling the likes of Youtube, HBO, and Netflix…
The reasons for such expansion rest on many factors which continue to undermine Spotify’s supremacy and security in the current market, one being their slow rate of expansion – particularly in comparison to Deezer – and the other determining factor being Spotify’s lack of music ownership. A problem which the company thought would gradually be overcome through their predicted popularity with consumers and possible negotiation made with labels.
Alas, the cards have not fallen in their favour as of yet.
However the video streaming side of things holds many promises. According to Billboards Biz, Spotify’s established popularity in Europe could aid a possible transition for video streaming to a particular audience in that that continent – Netflix’s presence being comparitively smaller, leaving the market open for the taking.
The stirrings of the universal streaming boom are also being felt at the homefront. Where, according to mUmBRELLA, Australian music streaming service Rdio have hired former General Pants and Viacom marketer Colin Blake as it’s most recent executive.
Described by Scott Bagby, VP international and strategic partnerships of Rdio, as having a “wealth of expereince working with some of Australia’s most iconic music and lifestyle brands,” Blake seems to be the perfect fit for a company who are looking towards the bigger picture.
Bagsby adding: “With the appetite for digital music among Australians continuing unabated, Colin will play a crucial role in expanding the musical footprint of the company through Rdio’s joint venture with dmg Radio as well as additional marketing and partnership opportunities.”
It seems that globally, the success of music streaming services shows no signs of abating. The IFPI’s most recent Digital Music Report notes that the number of digital subscribers to paid on-demand services grew by 44%, with over 20 million paying subscribers worldwide, contributing to 10% of digital music revenues which gave global music sales its first up-turn in growth since 1999.
The RIAA’s most recent report also confirms the significance of music streaming services, labelling ‘access models’ like Spotify, Deezer and Pandora, as well as sites like YouTube and Vimeo, as accounting for 15% of all American music sales in 2012, chalking up over $1 billion in revenue – five times the 3% it first contributed in 2007.
