Music Business

A Manifesto For The Future Of Free Music

6a00d83451b36c69e201156ef74fd6970cIn the thankfully long gone days of DRM downloads it could be fairly said that ‘music was born free yet everywhere it is in chains’. Now music is free of DRM and, for most consumers, of price too.

Guest Post by Mark Mulligan on Music Industry Blog 

Of course the majority of consumers have always spent most of their time listening to music for free via TV or radio. But the internet transformed free into something that was every bit as good as the paid for product. So yes, most people have always listened to music for free most of the time, but they listened to what broadcasters decided they would listen to. In the old model free music was something that would sate the appetite of the passive fan but was not be enough for the dedicated fan. Free music thus very clearly played a ‘discovery’ role for the core music fans. On demand free though has changed the equation entirely. For many consumers the free stream is the destination not the discovery journey. So 50 million YouTube views is no longer a marketing success but instead x million lost sales or paid streams.

Internet_radioFor younger consumers the picture is particularly stark. 56% stream for free, 65% listen to music radio and 76% watch YouTube music videos. Compare and contrast to over 25s where the rates are 35%, 47% and 76%.   In short, free is more likely to be something that drives spending among over 25s because it is predominately programmed while among under 25’s it is less likely to do so because it is on demand.

Free needs recalibrating. Here are a set of objectives to help fix free, a Manifesto for the Future of Free Music:

  • Set the objectives: One of the problems with free is there is too little clarity around what purpose it is meant to serve. And this is because it is simultaneously serving multiple purposes: to monetize the masses (ad supported), to drive sales (discovery), to drive subscriptions (freemium). All three are worthy goals but unchecked each one also competes with the other. A consistent industry vision is needed.
  • Programme more: Free has a massive role to play in digital music, but it needs to better targeted. A super engaged music fan should not be able to sate their on demand appetite on free. In short, free music needs to be less on demand and more programmed. That is not to say YouTube or Soundcloud need to become Pandora, but they do need to explore meeting somewhere midway.
  • Use data to segment: It is not enough to simply say users can choose between different services, they services need to better use their data to determine who gets what experience within them. Someone who watches 20 YouTube music videos a day is clearly a target for a Music Key subscription. That person should not just be marketed Music Key, s/he should also have their free experience progressively dialled down to push them towards it.
  • Fix the models: Pandora is a highly viable ad business that happens to have a radio service built on it. There is a world of difference between Pandora’s ad business and Spotify’s. Spotify’s deals with the rights holders essentially preclude it from making free a viable business, which is fair enough. But it does create the unfortunate vicious circle of there never being a case for Spotify investing enough in ad sales infrastructure to drive up CPMs enough to boost ad supported revenue. Labels and publishers need to think hard about what tweaks may need to be made to business models if they want freemium services to be strong enough financially to drive a vibrant subscription market. Not fixing the models will only skew the market to the companies with ulterior business models who can afford to perpetually lose money on free.
  • Don’t give up on free fans: A generation weaned on free music will grow up craving more free music. Just because free dominates younger consumers’ digital lexicon now does not mean that it will inherently always do so. Don’t give up on the lost generation of music consumers with the default position of free.
  • Strike the right balance: This is simultaneously the most important and most difficult part to get right. YouTube, Soundcloud and Spotify’s free tier are legal alternatives to piracy. Turn back the dial too much on the legal sources and illegal ones will flourish again. However the fact that more than a third of free streamers use stream ripper apps to turn streams into downloads means that the distinction between licensed and pirated has long since blurred. Nonetheless the balance needs to be better struck, probably somewhere equidistant between YouTube and Pandora. Ultimately it will require lots of real time honing and perfecting to get the right mix.

Free music will always be part of the equation and it has become a key part of the music industry’s armoury. But there is a difference between a controlled burn and an out of control forest fire. The freemium wars have already accounted for some high profile scalps and more controversy will follow. Free will remain a crucial part of the landscape but it is time for a reassessment of its role and that must encompass all elements of on demand free, not just Spotify.

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  1. Thanks for the great post. “Free” music is really a marketing tool and it’s used sloppily by many artists. Part of the problem is presentation and consumer psychology.
    Yes, professional music should be paid for (if the artist wants to be paid). But if you present your music as free to consumers, you’re going to have an awfully hard time selling it to them.
    For example, it makes sense to you that people should play a music video on YouTube and then go elsewhere to pay if they want to listen to it offline. I get the reasoning, and technically you’re right. But being technically right isn’t going to change reality. If you put music up for free on YouTube, then as far as consumers are concerned, you’re telling them it’s free – what difference does it make to you if they listen to the song online (YT) or offline (ripped)?
    Please don’t jump up and down – I understand what difference it makes. But the “free sometimes but not others even though it seems like the exact same thing from your point of view” is an almost impossibly hard message to get consumers on board with.
    RepX’s streaming marketplace takes a new approach to this problem. Music can and should be paid for – but it needs to be in a realistic way and easy/affordable for the user. Spotify is easy and affordable but it doesn’t pay artists well, so it doesn’t work as a sustainable model. We tweaked their model to develop paid streaming on an as-you-go basis (similar to Skype calls).
    We also are incorporating free music in a very strategic way; namely, free is promotional, not the default.
    And, most importantly, everything is directly between the artist and audience, because fans love artists, not platforms. All businesses do better when they know and connect directly with their customers, and we’re applying that principle to professional artists and their audiences.
    An example of how this actually plays out is listening parties: artists can offer their music (all or some of it, like a new album) for free during a certain time period (like 6-9PM on a given date). The music is free during that time, but it is presented as an obvious promotion so that the audience understands that they’re getting something free only because of a special occasion. Simultaneously, the interactive and event-like nature of the listening party helps build and strengthen artist-fan relationships.
    RepX isn’t open for use yet but you can read more about it at You can also contact us for demos or with questions.
    Thanks again for the post, and if anyone wants to chime in with other ideas for strategically using “free” music, we’d love to hear them. Be creative, the possibilities are nearly endless on our platform, and we actually use ideas and suggestions from artists (in fact, we got the listening party idea from someone in the comments over at DMN).

  2. “Turn back the dial too much on the legal sources and illegal ones will flourish again.”
    This is a false dichotomy. Reduce legal free sources and crush piracy a the same time. DRM was an excellent idea. Note DRM still exists on iTunes, for example, for movies and TV shows. It works fine and no one complains. Why not for music?
    Then, crack down severely on piracy, both on uploading, hosts (like YouTube and pirate web sites), and downloaders.
    Once the cost of piracy becomes too high, people will use the legal options.

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