Remember Taylor Swift’s break up with Spotify late last year?
In a quote for the Wall Street Journal, Taylor stated that “piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically”.
Taylor believed in the value of music and that people should be paying for what music is worth. Streaming platforms like Spotify could hurt music sales and artists’ revenue as music is available for unlimited free streaming even to users without premium subscription.
How true is this? During Fast Track Southeast Asia 2015 – a two-day conference that highlighted the trends, opportunities, and challenges of digital content production and distribution – two of the key issues discussed were the monetisation of online content and finding the right business model to achieve that.
According to Ang Kwee Tiang, Regional Director of the International Federation of the Phonographic Industry (IFPI), the total revenue of music subscription on sites such as Spotify and Deezer are 1.6 billion USD globally in 2014. Meanwhile, the total revenue of platforms such as Pandora and Sirius totalled 600 million USD in 2014.
“The music industry is getting money but not what music is worth,” said Ang.
Dr Asugan, General Manager of One Stop Music stated that although the number of subscribers could reach up to five figures, there is still a low migration of users from ad-based to premium streaming.
Norman Halim, Executive President of KRU Music noted the shift of consumption from music downloads to streaming, but he pressed the need to push users from free streaming to paid subscription. To Norman, the ability to stream music should be viewed as a sampling process that helps users decide on song purchasing.
These speakers were in opinion that these streaming sites provide platforms to digital artists to publicise their work and build a fan base.
“The access point for an artist is so much easier now. No longer do we need editing studios, sound mixing studios, expensive camera equipment, and broadcast network capability to get into the homes of millions of people,” said Michael Graham, Senior Executive Director of PWC Consulting Associates.
However, there will come a time where these digital artists will need to monetise their content.
Ang stated that unlimited streaming could encourage users to develop a mindset that music has no value and is not worth paying for. This is where the challenge of monetising music content on music streaming websites arise. Michael believes it’s all a matter of finding the right price point, and that this is an issue that can be looked at in a more universal manner.
“The price point is a very important aspect of anyone’s experience. If there is a reluctance to buy for a start, there might be a reluctance to buy it as a whole. But there might be an acceptance to buy the content and also everything that goes around it if you’re a super fan.”
“If you get premium access because you’re part of the membership and ecosystem that sits around the product, then yeah, of course you’ll pay for that. The same way you’ll pay to watch a rock concert,” said Graham.
Chris Slaughter, Chief Executive Officer of CASBAA added, “When you talk about the digital world, the challenge is that the price point needs to change. It needs to be done differently. It either needs to be bundled differently for different things or it needs to be niche, so it’s only the people who really love it are going to pay for it.”
“There’s a lot of experimentation done in developing business models. We are all trying to figure out different consumer offerings. Some models won’t work, other models will work magically. Somewhere in between are where most of them will be. There will be hits and misses,” Chris continued.
Chris uses the iTunes store as an example. Despite initial worry that people will continue stealing music by downloading mp3s illegally, the iTunes store has revived the music industry thanks to its accessibility, user-friendliness and effective price point.
Even if the music industry’s revenue hasn’t been as robust as in the early milennium, Chris notes that sales of digital music has brought music sales back up after a long slump.
“Although it’s not as high as it was before, the fact is that once you solve the basic problems of the price point, the access, and mechanism, a lot of other things just fall into place,” concluded Slaughter.