Music Business

Is $5 The New Normal? Apple, Music Streamers Push To Lower Monthly Prices

$5 saleThe race to the bottom is on…

Yesterday, Spotify introduced a family plan that allows Premium subscribers to add up to 4 "family" members to their plan for just $5 per month.  Each gets their own distinct and fully functional Spoitfy Premium account for half the usual $10. There are also increasing rumors that Apple is pushing record labels for a $5 monthly price point, as it seeks to launch an expanded music subscription service based on recently purchased Beats Music.

If the labels allow one music service to offer $5 subscriptions, it will have to allow all of their competitors – Spotify, Rhapsody, Deezer, Rdio, etc – to do the same. 

image from 2.bp.blogspot.comApple's argument is that active iTunes buyers spend about $60 a year on downloaded music – or $5 a month, sources tell ReCode: "So if subscription services dropped that low, any download buyers that switched over to the streaming model would generate just as much revenue for the music labels. And, more important, the market of potential subscribers would get much larger."

A Rumored Compromise

Several sources I've spoken to over the last few days believe that what will result from these talks is a compromise position – a tiered approach that offers users more for at, for example, $5, $7.50 and $10 monthly price points.

Where's The Proof?

And while both sides make valid arguments about how different pricing structures would either grow or decimate revenue to artist and labels, Ive yet to see a single real study or even survey that proves either position. 

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