Music Business

What does Netflix know that its music counterparts don’t?

“Discovery is one of the core benefits that we provide to people. If we can get you to discover one new item of content that you absolutely love every single month, we’re pretty sure you will remain a user or customer with us for a very, very long time.”

Daniel Ek, Spotify founder and CEO

By Matty Karas from @MusicREDEF

I’m feeling this tweet about the cost of unbundled TV.

I like bundles—with the exception of the fake omakase at SUGARFISH and the sushi deluxe almost anywhere else—and I remain happily amazed that the music business has concluded that streaming music generally belongs in one giant global bundle with tens of millions of songs in a single subscription with no need to buy an add-on to hear KANYE do gospel or the guy from FUTURE ISLANDS do rap. And yes I know there are exceptions, but they represent an increasingly tiny part of the market.

It didn’t have to turn out this way. The fact that SPOTIFY, APPLE, TIDAL and AMAZON don’t have wildly different catalogs—some of them tried—was not at all a foregone conclusion. It was, and still is, a conscious choice. It isn’t Thanksgiving yet, but thank you for that, music industry. If someone has a niche interest—classical music, say—she may find she has no choice but to subscribe to a second service. But there’s no music equivalent of having to pay separately for DISNEY+ and NETFLIX and HBO and APPLE and PRIME and lord knows what else just so she and her family can get through a couple of nights of entertainment.

So why, a decade-plus into this paradigm in which anyone can hear any song or album on-demand with a single subscription, and in which the streaming companies and the artists and songwriters who supply the content say they’re struggling to profit from it, is everyone still paying 2008 prices for all of this?

I’m not asking you to raise my prices, Spotify. Nor you, Apple. I’m not asking you to raise anyone else’s prices either. I’m fully aware the economy isn’t working for everyone, music fans included. But I do wonder: If the struggle to keep streaming companies afloat is real, and if labels and publishers want money in the pockets of their artists and composers, why hasn’t someone figured out how to make the case that maybe it needs to cost a little more and that maybe it doesn’t have to be so painful?

What does Netflix know that its music counterparts don’t?

Is it innate to how we consume music vs. how we consume movies and TV? Is it something about the way the two industries developed over the years? Is it a lack of imagination? A lack of actual need? And, oh wait, is Spotify maybe just maybe turning the corner into profitability, and is it doing so by paying out less of its revenues to labels (and, therefore, to artists) than it used to? Just asking. And wondering.

And speaking of Spotify, DANIEL EK says the potential market for streaming audio is 2 to 3 billion people worldwide and Spotify’s goal is to own at least a third of that market. “So we probably have somewhere between 10, 15x from where we are now of opportunity left,” he tells investor/podcaster PATRICK O’SHAUGHNESSY. “So we’re still very early days in our journey.” And so, OK, maybe let’s keep the price at $9.99 after all. I mean, if a billion people are going to pay it.

Ek also tells O’Shaughnessy that for him, music discovery (see quote above) includes “rediscover[ing] things that meant something to you 10 years ago.” Ek’s programmers don’t necessarily need to take you to the far reaches of that record store in the sky, it turns out. Maybe they just need to take you to the back of your own closet. What’s the right price for that?

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  1. Netflix premium users can recognize the expense of productions like The Crown, and thereby justify the Premium expense even when it rises. On Spotify, we literally don’t *see* the value that goes into the new music nor have an very clear way to find it unless we go into active discovery mode….I think most people just use Spotify as background/passive listening, not active. And it can’t compare to the valuable knowledge that our live radio DJs in the past on FREE radio…so we’re now paying 9.99 to figure it all out for ourselves, or trusting their AI machine. It’s comparing apples and oranges.

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