NY Times: A Stream of Music, Not Revenue

A Stream of Music, Not Revenue

Published: December 12, 2013

When Spotify, the digital music company of the moment, announced this week an exclusive deal with Led Zeppelin and free access on mobile devices, it also reported impressive numbers. Its listeners have streamed 4.5 billion hours of music this year, and it has paid more than $1 billion in music royalties since its founding.

But Spotify, a private company, omitted the results that music executives, competitors and investors care about most: how many people use the service and how many pay for it.

Services like Spotify, Pandora and Apple’s new iTunes Radio have become the latest hope for the beleaguered music business. They let customers listen to vast catalogs of songs online, either free or through subscriptions for as little as $3 a month.

With download sales cooling after a decade of growth, streaming has the potential to transform the industry’s financial model by charging for the very act of listening. Instead of selling a CD or a download, companies could earn royalties every time someone clicks to hear a track.

Yet even as they have grown, streaming companies have encountered a stubborn problem: Music lovers will consume large amounts of music as long as it is free, but getting them to pay a monthly subscription has proved much more difficult.

“There is this irrational resistance for people to actually plunk down their credit card for streaming services,” said Ted Cohen, a digital music consultant with the firm TAG Strategic. “We’re 13 years into the Napster phenomenon of ‘music is free,’ and it’s hard to get people back into the idea that music is at least worth the value of a cup of Starbucks coffee a week.”

For the full article, visit the NYTimes site.

Posted by Ted • Thursday, December 12, 2013 .