Trade Review: Week Eight (2/2)

Is Music Streaming Good For Album Sales?

The notion of whether or not Spotify and other music streaming services are beneficial for artists is a heated debate filled with legislations, piracy, royalties and much more. The fact that websites like Spotify pay the bare minimum for royalties over a song angers labels and artists alike ($12.50 for 90,000 streams). However, what most industry executives and artists cannot argue with is the immense exposure music streaming provides for all artists. This article observes Mumford and Sons’ sophomore album sales and whether or not music streaming inhibits their sales. For their release, the record label executives permitted the full album, Babel, to be available in the same week as its release, a strategy most artists have strayed away from. The increased availability and accessibility allowed Mumford and Sons to obtain over 600,000 records in its first week and have six Billboard top 100 songs at the same time, which has not been done by a British band since the Beatles (McCallum).

Mumford and Sons’ record label, Glassnote, proclaimed they were absolutely thrilled with the results and believed music streaming encouraged more album sales due to increased accessibility. Consumers simply being exposed to Mumford and Sons’ second album is a modest statement, for the album was played more than eight million times in the first week on Spotify (McCallum). To put it into an even more impressive perspective, one of ten songs played in that week by all Spotify users was from Babel (McCallum). Smashing previous record holders on Spotify, Glassnote was thrilled with the results as it hints at international appeal, a strong fan base and the power of word of mouth in streaming services. Music streaming is exactly what a middle-class level band on the verge of superstardom like Mumford and Sons needed to throttle their career into the upper echelons of international artist recognition.

However, music streaming is not always beneficial for all artists, where some artists refuse to even make their content available on streaming sights as a way to maintain the traditional business model of the music industry. This is commonly found amongst superstar bands and musicians because they believe music streaming has a negative, chain reactive effect on multiple streams of revenue. Yet, from the Mumford and Sons case study, music streaming appears immensely beneficial for lower to middle level bands looking for incredible exposure and opportunity. Glassnote said despite minimal royalty payout from their eight million streams, the amazing exposure of music streaming would eventually increase other streams of revenue.

Trade Review: Week Eight (1/2)

Microsoft Offers Free Music Streaming, With Limitations

Joining the music streaming bandwagon, Microsoft is preparing to release a multiplatform integrated music streaming service call Xbox Music. Compatible and synched to a user’s Xbox, Microsoft Phone 8 and Windows 8, Xbox Music plans to elevate and personalize Microsoft products and the brand itself by competing with music streaming giants like Pandora, Deezer and Spotify. Already having a massive consumer population, Microsoft will have no problems in attracting users to their new music streaming service. While Apple has the largest musical library, Microsoft will once again have to compete with its biggest rival (Apple) in providing the better or equally large musical library. However, Microsoft is one step ahead of Apple in the music streaming sector, for Apple has only been rumored to be in the works of developing a music streaming software. Microsoft’s Xbox Music will have many features like ad-free subscriptions, multiplatform synchronization, personalizing playlists, scan-and-match to suggest new music based on your music library.

The major catch to Microsoft’s new service is that after six months of initial usage, the consumer will be limited in how many hours of music they are allowed to listen to per month. This completely counter-acts the unlimited aspect that most music streaming services provide and use as their main selling point. For Microsoft, their selling point is the fact that the music streaming works on 3 platforms (console, PC, and mobile) and can only work on Microsoft platforms alone that have been on the market since 2011: “older software won’t have access to the new service at the outset, nor will people with Apple’s mobile devices or those running Google Android operating system” (Sherr). Exclusivity of only contemporary Microsoft products is what Microsoft hopes will drive business and the fact that limitations are also set will encourage value in the program and of each song. By only allowing Xbox Music to be compatible with contemporary Microsoft products could also increase sales of products by consumers upgrading their devices; however this could also discourage consumers using Xbox Music because most do not want to purchase new systems to listen to limited music. 

Trade Review: Week Seven (2/2)

Deezer Gets New Financing, As Business Analysis Site Questions Current Streaming Music Model

Deezer, an Internet music streaming service similar to Spotify, just raised $130 million dollars from Access Industries and other music-media companies in an effort to buy out a few Deezer shareholders and bring in fresh faces with innovative ideas. Deezer, which has yet to penetrate the American market, looks towards expanding and taking asvantage of the untouched international countries. However, with a similar business model to Spotify, Deezer is already speculative of how long can the subscription service model for the recent, innovative music streaming service websites last: “once the venture capital that is propping up this seemingly booming market runs out, will there be a sustainable business without drastically increasing prices to the consumer, or renegotiating royalty terms with the rights owners” (CMU). For this reason, Deezer is hoping their new employees will bring a better, sustainable model that will have a lasting effect on the music industry.

With music streaming services having flat, monthly rates, a future change in their pricing to make up for lost revenue from uninterested users leaving the websites would create a similar downturn that physical CDs went through in the late 2000s. In light of this, Deezers wants to reassure music streaming lovers and future customers that they do not plan on making consumers foot this cost despite the ever-changing music market and consumer tastes. Deezer wants to reinvent the Spotify business model and turn it into a reliable stream of revenue for streaming companies and music industry sectors alike.