By Eliot Van Buskirk of Evolver.fm.
It’s no simple matter to make music fans happy enough to pay $10 per month, even for unlimited access to most of the music in the world, while also paying royalties to record labels, music publishers, and artists. As another indication of just how tricky that balancing act really is, one of the leading services — MOG — sold to a celebrity headphone company for a mere $14 million. By comparison, Spotify’s market cap is reported to be about $4 billion — 286 times what MOG was worth to headphone kings Beats Audio.
The leading online radio service, Pandora, lobbies Congress to ease up on the royalty rates it has to pay SoundExchange, and other than Clear Channel’s iHeartRadio, it doesn’t seem to have much in the way of competition for the online radio market — a sign that some take that “the rent’s too damn high,” so to speak, for internet radio.
However, the situation couldn’t be more different in the other half of the digital distribution market: the unlimited, on-demand music services. Spotify has the lead, but Deezer’s been crushing it in many areas of the world, and just scored major funding of its own ($130 million, says The Next Web). Meanwhile, Rdio, MOG, and Rhapsody continue to entertain loyal fans.
Now, the bigger players are getting in on the fun. Yes, unlimited, on-demand music is heating up, after countless earlier subscriptions failed. Massive, multinational corporations are getting in on the unlimited music business, in part as a strategy for making their hardware more attractive — sort of like Apple did with iTunes.
Just about every major technology brand is trying to pull an Apple right now, by launching their own end-to-end music ecosystems… even if it means losing money. As the head of Microsoft Xbox Music told us in a Manhattan meeting earlier this month, unlimited music could become a sort of loss leader for all kinds of other companies — assuming they can create something that works as well as Spotify and the other “pure play” music services.
In part, this resurgence is happening because the DRM that enables music subscriptions is now invisible to the consumer – a massive shift whose full impact has yet to be felt.
Microsoft: Eager to put its “Zune-doggle” behind it, the Redmond Giant is doubling down on Xbox Music across not only its multi-purpose gaming console, but on Windows Phone 8, Windows 8, and Windows RT tablets. If you play a music file on any of these devices, the player that launches automatically has over 18 million other tracks, free for the playing.
Samsung: The Korean juggernaut snapped up mSpot in order to launch its own unlimited music service, Samsung Music Hub, which combines a locker, download store, and streaming radio service with unlimited music.
Sony: The company that brought the world portable music only to miss out on digital music completely is giving it another another shot with Sony Music Unlimited. Whereas Sony used to sell downloads that only its weird hardware players could play, the company has wised up, and offers its unlimited music on iOS and Android.
Will these big players make a dent in a market so far dominated by start-ups? We shall see. They certainly have the deep pockets and bundling options to give it a good shot… unless the internet only wants one of everything.
(Image courtesy of Flickr/all that improbable blue)