Thursday, December 20, 2012

Free Music?

The music industry continues to grapple with streaming and new subscription models and is generally shrinking and what is a volatile market. The pirates are still here, but so are a growing number of services whose legitimacy is often hard to determine. Free music and file sharing can be traced back to Napster and those that followed such as Kazaa and The Pirate Bay. Free music is not going away and making sense of where we will end up and balance the market is often hard to determine.  

This week we were introduced to a new Android app ‘Music Download Pro’. It looked and behaved like a music download service allowing extensive search against artists, tracks, albums etc and the results were quickly displayed and were quite impressive. You can then sample a track or download it and the result was quite impressive regarding the speed and quality. It also remembered your downloads in the library, so you can replay them at your will. The challenge we found was that there appears to be no pay slot and the app itself was free, so where’s the money?

Spotify continues to lead the streaming music market and has a sizeable audience across Europe and the US. Its Premium subscription service has a growing following with users willing to pay a monthly fee to receive ‘as much as they can eat’ ad free music. The free ad funded model still works in parallel and they do have a model that everyone can see and which importantly pays royalties.

We now read in Lifestyle that 68.6% of Japanese spend no money on music downloads. We can’t substantiate the validity of the claim, or the basis of the sample surveyed, but the Japanese music market is claimed to have narrowed to the big hitters and ‘X Factory’ clones. The alternative revenues from ringtones, concerts and merchandise do offer new or increased revenues and the market mix is obviously in a state of digital flux, but if consumers reject the pay model – where’s the money?

So where could we be heading?

There will be various revenue models that are based on the artists ability to turn their fans into money. It’s not about selling records but selling stuff to fans. Will artists now make more money from product endorsement of a perfume, car, watch etc and their image, than they make from music royalties? We often assume artist will all make money from concerts and merchandise but does the celebrity factor make a bigger contribution in the future and what does that mean to the music produced? Do we now accept the fabricated stars as musicians or merely as celebrities?

Meanwhile we continue to download music for free via the likes of Music Download Pro and think little of who’s paying for it.

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