Will subscription services take over the music industry?

Okay, I’ve got a friend who’s trying to convince me of some—to my way of thinking—crazy ideas about where the music industry is headed. But maybe he’s not crazy, I don’t know. You guys tell me.

His basic assertions are:

  1. Subscription based streaming music services will someday be the primary means of music consumption. He doesn’t mean accessing your library via the cloud (Amazon, iCloud, Google Music), and he doesn’t mean Pandora, he means the monthly fee services like Rdio, MOG, Spotify, Rhapsody, and the Zune Pass (is that still around?). I’m willing to concede that this is possible, but I feel like we’re too soon to even call it likely, much less that…

  2. …it will all happen soon. He’s saying 2–5 years and streaming will the the default. That sounds stupidly fast in even the most charitable view of his ideas.

And then he uses these points to try to tell me Apple is doomed because they don’t have their own streaming service and iTunes is dead in the water in six months (seriously, he thinks that’s how long Apple has to offer music subscriptions or it will significantly affect sales of their platforms) blah blah blah, but I can shout him down on the Apple stuff just fine on my own.

It’s his ideas about where the industry’s headed that I’m must curious in hearing about from you guys though. Am I missing some big signs that he’s seeing?

Or just more generally, what do you think it would take for subscription services to take over as the way people primarily “buy” music?

What I have found is that once most people try a subscription service, particularly people who like disposable pop music, buying your music on a permanent basis seems ridiculous. I subscribed to Yahoo Music (one of the first batch of PlaysForSure subscription sites) back in 2005, and I thought it was revolutionary and that everyone would switch to subscription services any day now.

Six years later, obviously, they haven’t.

Reasons why this could change soon:

  1. Netflix has made people more comfortable not owning things. You have no idea how much mental friction a subscription model caused people back in the day. “But I spend all that money, and the instant I stop paying, I lose all my music!” Well, no, you don’t HAVE any music, it’s a service, not an ownership thing. But now you can just say “it’s like Netflix for music” and people have a niche to put that into.

  2. Smrtphones. The problem with subscription services back then was that to get your music onto your MP3 player, you had to use Microsoft’s horrid, unreliable DRM. I ultimately got unsubscribed from Yahoo Music after like eight rounds of back-and-forth with their support people was unable to resolve a problem I was having. And using Rhapsody after that, problems syncing up to MP3 players were common (though in that case always resolvable with reboots, reformats of the player, etc.). But now, nobody nees to care about DRM, because the app handles the streaming (and local caching if desired). Rhapsody on iOS is a zillion times more convenient than Rhapsody with a Sansa.

Reasons why it might not change:

  1. Price. Yahoo Music in 2005 was $5, which seems like a fair price to me. All the services now are $10, which is more than Netflix streaming. To a large degree, this just points out how cheap Netflix is, but $10 really is kind of a lot of money for music. That’s like buying a CD, or ten individual tracks, every month. Do a lot of people do that? I have no idea.

  2. Selection. Rhapsody has a pretty solid selection these days, but there are large and obvious gaps. You’ll never find yourself unable to listen to music, but you will sometimes find yourself unable to listen to a particular song you wanted to hear.

  3. Convenience. Yeah, I have a smrtphone, and I can plug it into the AUX-IN in my car. But with music I own, I can load it on a USB stick and plug it into the car’s USB port and navigate it with the car’s regular stereo system. And sure, Rhapsody will stream to my Squeezebox so I can play it on my regular stereo, but most people don’t have a Squeezebox, and they can play their personal music with their 360/PS3.

  4. People still like owning things. If you are like the world’s biggest fan of The Decemberists, at some level, you will want to own their new album, not just be able to listen to it on a service, coequal with everything else.

The big difference, for me, is that my experience of music is not my experience of most other media. I don’t typically listen to a song once, then move on to something else. I go back to favorite songs and favorite albums and favorite artists over and over and over. So I’d rather just buy a copy of those songs in whatever format and have it on my shelf or iPod or whatever for when I decide to go back to it. I’m not constantly seeking out new music, either, nor am I conversant with most bands or music terminology, so I am instantly lost when I wander into music discussions here or on other forums. And while I don’t think much I listen to is especially obscure, per se, a fair amount of it originates outside the US and may not even be licensed for sale here. (Or streaming.) Add to that the same issues other digital streaming services face for other media (i.e., the content owners have you by the balls and can pull stuff whenever)…and I just don’t think it’s for me.

By contrast, I almost never watch a TV show or movie more than once, so an all inclusive, cheap monthly rate setup for watching pretty much anything I feel like watching has been an -excellent- deal. I do own a fair number of movies and TV shows on disc these days, but that’s a combination of convenience, sale prices, and the real possibility I might want to make one of my friends (or my parents) watch them, in which case it is far more effective to hand them a disc case and go “Here, watch this.” than it is to say, “You should watch <name of show>. You don’t have a rental service and probably won’t go out and get it, but you should.”

I have no idea how accurate the numbers in this infographic are: How much do music artists earn online?

Even if they are off, they aren’t by much.

Subscription services may well replace listening to music on the radio, but I really don’t think they’ll replace ownership.

God I hope so. Streaming music is awesome. Between Spotify, Rhapsody and Turntable, I have 90% of my music needs covered. It’s getting to the point where if your band isn’t on one of them, I really can’t be bothered to seek you out.

I don’t think they’ll completely replace it – there are plenty of songs that I am going to want to listen to over and over for decades to come – but I think they replace more than just the radio. Just like with Netflix, the bar for me to to clear to actually purchase a piece is pretty high these days.

Responding to no one in particular but adding more thoughts I tried to bring up in the debate with my friend:

If Netflix shows us anything, it’s that the streaming subscription model isn’t well established. In the last couple years it finally hit the collective consciousness of the public, so now we’re still seeing very public growing pains as the studios finally react and start renegotiating the content licensing—for realz this time. Who knows how it’s going to shake out? I’m not about to leave Netflix, but I’m also not about to speculate on what it will look like 18 months from now. And I’m guessing the same thing could happen if music subscriptions start to take off in a big way with the public.

And we’re definitely not there yet. Right now when I tell my friends about Rdio, I have to start every conversation with “Well no, it’s not quite like Pandora, it’s actually…”

Subscription services may well replace listening to music on the radio, but I really don’t think they’ll replace ownership.

This seems about right, although I’m sure there will be some shift from ownership to subscription streaming. Spotify is a great service (in the UK - not sure what it’s like over the pond) and I’m sure it satisfies a lot of people’s music needs. But for me, streaming has a lot of the same problems as radio - I can’t listen to it on the Tube or on a plane or in a foreign country unless there’s Wi-Fi. Given that’s where I do most of my music listening, I’m reluctant to pay for it despite spending a fair bit of money on music.

I’ve decided that I don’t care if I own the music I care most about, only that I have them recorded in a list so that I don’t forget about them. My biggest annoyance when switching from my personal library to Grooveshark or Spotify is that I have to manually refind all my old music. So ideally for me there would be a simple way to carry around just your artist/song list and have whatever service pick it up as well as provide access to new stuff.

As for how much I’m willing to pay, I’m not sure. I was happy to buy an album every 1-2 months, but now grooveshark is training me to get as much music as I want free, all the time. But just like netflix, I can’t see that being fair to anybody in the long run.

I can’t imagine paying a monthly fee for music because I’m at an age where I just don’t care that much anymore. Pandora is cool and does exactly what I want it to – give me something to sort of listen to while I do something else. There are also the music channels that come with the cable TV packages.

So unless a service like Pandora disappears, I think there will always be a market segment that wants music for free and doesn’t discriminate too much about the individual bands and songs.

And at some point isn’t there a prospect of there being too many subscription services? How many different plans can consumers support? Phone, 3G for phone, internet, cable TV, Netflix, an MMO sub, 3G for tablet, music, Hulu, Skype, etc. It starts to get nutty.

If you care at all about music and musicians, $10/month is a ridiculous bargain. I’m currently using Spotify, but its few holes are being plugged with Amazon MP3 downloads.

The Rhapsody app lets you download stuff onto your phone, so you can use it when you have no connection.

I don’t think you can get Rhapsody in the UK.

Basically a non-starter for me. When I was employed and living near the Disc Exchange in Knoxville (a legendary Tennessean record store), I was in there at least once a month to buy a small armful of albums, and my fiancee bought at least as much vinyl there, in bargain bins across town, and even on Amazon. We’re by far the exceptions to the norm, but I sure hope that physical releases don’t go the way of the dodo anytime soon.

Hell, I don’t even have a “real” mp3 player yet. I bought a friend’s ex-wife’s 4GB iPod nano when he was short on rent one month, but 4GB of music is pretty paltry compared to my overall collection.

there a several good channels on pandora that have no ads, maybe due to the fact that they are somewhat obscure artist specific channels. i’m not sure why anyone would want to pay for a subscription.

Progress report. Mostly about streaming revenue.

On the physical sales front, Vinyl sold 23 million albums versus only 15 million CDs.

Gosh my original post seems silly now! The shift may have happened slightly slower than my friend predicted, but he was pretty much dead on about the music side of things.

And of course Apple did join (or buy their way into) the subscription party too, although in retrospect I think we both had some of our Apple prognostication wrong. I still don’t think Apple not having their own music streaming platform would’ve been fatal to the company, and I think it took them longer to get one than he was guessing. But in retrospect I also wouldn’t have anticipated the larger scale shift to revenue from services. Apple would still be more or less Apple today if their services didn’t include Apple Music, but I do think Apple would in a considerably weaker position today if they hadn’t made any moves into revenue from services.