Subscription 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.
Stakeholders 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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