The modern music-buying public appears to record companies as belonging in three distinct patterns of behavior. There are the law-abiding peaceful ones who will always pay for their digital music; there are adventurous types who can't seem to find music enjoyable if it is paid for ; and then there are the practical ones: people who resort to illegal copying only because it is so difficult to get around DRM measures, difficult to find all the music one wants in one place, and difficult to obtain a credit card. Such pirates-of-convenience really would prefer to pay for their music if only the industry would sort out its differences and offer them a single, unified, easy-to-use service; and the new business that these new buyers bring would be a welcome financial prop to a struggling music industry. Industry analysts readily agree today that their policies so far have only succeeded in turning away such possible streams of revenue by making it hard for music fans to explore new music, to listen to it and to buy easily it if they want it.Traditional avenues of music revenue have all but dried up in recent years; and yet, paid music download services like iTunes or Rhapsody have not even begun to address the shortfall in the revenues that music companies have come to depend on. Today, the music industry has found that it has no choice but to make nice and compromise with the convenience pirates that they were squarely opposed to only little while ago. Legitimate music services today offer free streaming music to one and all, and aim to wean the convenience pirates from their file-sharing download habit. The record companies finally seem to be succeeding, what's more.
We7 is a new and wildly popular music service in Britain that was co-founded by Peter Gabriel. It has snagged and retained more than a million users in its year or so in existence; the service offers members unlimited on-demand streaming access to a database of hundreds of thousands of songs. The success of the service underscores the relevance of the new attitude the music industry has learned: the new attitude believes that people do wish to pay for their music as long as it is convenient and reasonable. Surveys show that two-thirds of all young music fans in Britain tune in to a streaming music service at least once a month, and a substantial proportion of these do so more frequently than that too. Surveys also show that these very same young music fans report today that they use pirated music only half as much as they used to a short while ago.
Streaming services such as We7 are beginning to look like the music industry's greatest hope now. It is surprising that the industry's greatest hope should come from the continent today, that held the greatest threat to it in the form of unbridled music piracy only a short time ago. We7 is not alone; there are all kinds of other streaming-model businesses, Deezer, Spotify, and not to mention MSN, have been popular among them. All of these operate on the same premise: offering streaming access to a complete database of music on-demand, but with the blessing of the music industry; costs are covered by advertising. This service is only to be interpreted as a glimmer of hope for the music industry though; illegal downloads still do threaten the very existence of the music industry.
What makes the success of this new service cause for especial optimism is that the users it attracts do not come from audiences who already used to buy paid downloads; users who come to this service are all-new to legitimate music use. Spotify, fresh off its success across Europe with 4 million users, is set to bring its business model to America within the year.
This business model is not new to America, of course; the US already has well-established players in the streaming business, like Pandora, Imeem, and MySpace music. The problem is that even the well-established American players have not actually ever turned a profit yet though one is expected to do shortly. Advertising has not so far proven to be a proper support model for a streaming music business. Anyone has used any of these services for even while would probably be struck by how sparse the advertising is that is supposed to support these businesses.
But the streaming services established in America are not really the same as the ones in Europe. The European services are squarely focused on the music listener, and give the listener a full on-demand music service. The American one on the other hand, makes the music on its servers a part of an online networking experience or makes it merely a radio service where the user cannot actually ask to listen to anything of his choice.
Spotify and others today are even experimenting with offering a subscription service that tempts users with an advertising-free experience and a way to stream music to an iPhone. The major record labels today charge one cent for each streaming track played. With promising revenue coming in from such track fees, the labels are now dropping their track fees by 20% to help this growing market out. Record labels are venturing into new ways of earning their revenue too; in some cases they go in for a stake in the music service, and in others they ask for a share in advertising revenue; basically, the business is trying everything out for size before settling in on a proper pattern. In countries in Europe like Sweden that are especially tolerant of a freedom to copy music, these streaming services are already the top revenue earner for the record labels. Only time will tell how everything plays out; but analysts agree that things are moving in the right direction now.
Linus Orakles
http://www.authorclub.info/
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