Music Business

Spotify, Pandora and Other Streaming Music Services Will Never Be Profitable, Says Study

moneySubscription music services like Spotify and Pandora are on track to double by 2017, according to a new study, but they will never turn a profit. The barrier to profitability for steaming music, according to the analysis, is the 60-70% of revenue each service pays to labels, publishers and artists. 

image from www.computerworld.comStakeholders could lower their rates, but that seems highly unlikely, according to analysts from Generator Research which produced the report.

So to survive, says the study, music strreamers likely need to be sold to a deep pocketed partner and "for a (publicly) listed company like Pandora this would mean that the company would need to be taken off the public market."

Brights spots include bundling with other services (like AT&T and Beats) and selling value added services to consumers. "Services like iTunes Match and Google and Amazon are already heading in this direction," the research stated.

Source – Digital Music Subscription Services: 2013 via Computerworld

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1 Comment

  1. I don’t know, is it just me or are most music streaming services kind of “flash in the pan” ? To be fair, I don’t actually listen to the radio anymore, but at it’s best, it still miles ahead as a format experience than streaming has been so far. I think that’s why Youtube is so popular, it’s the closest thing to a “radio type” experience on the web, in my opinion. I can listen to a review of a new album, check out the album itself, and engage in discussion in the comments. Youtube has led to discoveries for me, and sales for whichever artist I’m getting into.
    I was heavy into Pandora in their earliest days. I think what turned me off at the time was the lack of curation, combined with the genre separation, and having to create a new station to hear different things. Web based companies have to get into the idea of UI design, how the user interacts with their product. No one has beat “spinning the dial” or push button presets yet.

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