Wildest Streams

In May 2009, the New York Times reported on the launch of a new streaming service. According to the Times more than a million users across Europe had already signed onto the service, most of whom were paying nothing for access to about three million songs through computer downloads. The music service’s 25-year-old founder, Daniel Ek, was quoted in the article. “My hope and ambition is that we’ll see something at the end of the year, maybe the beginning of next year, in the U.S,” said Ek. “We want to be everywhere.”

The service was Spotify, the global behemoth of music streaming. The concept of Ek’s industry-defining company was simple, access a universal catalogue of music by either paying a monthly fee or listening to ads at the start of a song. Today, Ek’s desire to be “everywhere” has transpired (well, almost). As of June 2015, Spotify is available in 58 markets and boasts around 75 million active users. Pretty impressive for a company that’s only been around for eight years.

But Spotify is just one example of a number of services answering the need for ready-to-access music. Deezer, Apple Music, Pandora, SoundCloud, Amazon Music and Google Play Music, among others, have all emerged in the wake of the streaming revolution, providing access over ownership for a global community of music lovers.

When it comes to pressing issues in the music industry the perceived ‘value gap’ between the income of large online companies is big Allen Bargfrede, Rethink Music

Spotify was by no means the first attempt at universal music streaming. Napster was perhaps the most recognisable predecessor to today’s streaming services. But what Napster lacked, (a legal means to distribute music), Spotify and co. have. Between 2000 and 2003, the amount of revenue created from selling or streaming music in the United States alone had been cut in half, from $14.3 billion to $7 billion. Spotify seemed to spell musicians saviour, but that saving was not quite so straightforward.

In a market of mass music availability, streaming services are struggling to set themselves apart. In the race to come out on top, how has the music landscape changed? And what are the steps needed to engage consumers, stay ahead of the competition and retain relevance?

Key Takeouts

• Strike a balance between offering content that’s fair to artists while still being convenient for the consumer
• Don’t window consumers into single platform options, they will always find a way around it
• Management now is not just of an artist but of a community.
• a streaming service by looking at not just the content, but the people that create and appreciate it. Think: access to artists, simple sharing tools etc.

Artistic Associations

The relationship between an artist, a label and a distributor has always been notoriously complicated. Feuds between artists and labels are well documented, and quibbles between distributors have also been wrought with issues. Nonetheless, the rise of streaming seems to have further strained an already tense partnership.

Taylor Swift is perhaps streaming’s most infamous foe. Towards the end of 2014, Swift decided to remove her entire back catalogue from Spotify, citing a lack of adequate artist payment as the reason. Last summer, Swift pulled her catalogue from Apple Music over similar concerns.

While Apple changed track and won Swift back on side by deciding to pay royalties to artists during its three-month free trial, the dispute between Swift and Spotify is still ongoing.

Streaming may have saved the music industry from total decline in the form of Napster, but the heyday of plentiful album sales has not been replicated. The average stream on Spotify, for example, is worth between six-tenths and eight-tenths of a cent. It’s not a lot when you look at it in the context of paid downloads, where around a hundred and fifty streams equal one ninety-nine- cent download.

“When it comes to pressing issues in the music industry, the perceived ‘value gap’ between the income of large online companies is big,” says Allen Bargfrede, founder of Rethink Music, an initiative dedicated to supporting the future of the music business. “The amount of money received by rights holders and creators continues to be a large part of the discussion.”

The debate over artist payment shows no sign of abating. There’s still dissatisfaction with a muddled process where the division of royalties is at best confusing, and at worst exploitative. It’s in this context that Cédric Cobban founded PeerTracks, a music streaming, talent discovery and fan engagement platform that allows everyone – content creators and consumers - to make a living from music. Using Blockchain technology, PeerTracks makes royalty payments transparent through Blockchain’s independent peer-to-peer ledger. “PeerTracks sends payment instantly,” explains Cobban. “It divides up royalties automatically and you can actually see the metadata which is on the public blockchain. It’s transparent and that’s what the industry needs.”

Fairer payment terms for artists is not an idea exclusive to PeerTracks. Singer-songwriter Imogen Heap decided to cut out the middlemen and give musicians more ownership over the money and data produced by their work. Heap’s latest song, “Tiny Human”, debuted last year on Ujo Music, a platform similar to PeerTracks, where users can buy the song using a cryptocurrency called Ether. The money goes directly to the producers, writers, and engineers involved in the song’s production.

Then of course there was the star-studded Tidal, a music streaming service built on the premise of artists reclaiming control of their work’s distribution, backed by a host of superstars including Kanye West and Beyoncé. Although its development has been far from smooth, with a number of technical mishaps and poor planning moves, Tidal is emblematic of artists tired with the streaming status quo.

Blockchain
Currently, every interaction we have online relies on a central authority, be that an online banking system or our email provider. The Blockchain is a digital public registry of a continuously growing list of data records, hardened against tampering or revision. As a record of digital events it allows strangers to hold and exchange digital money in a completely transparent way, without having to rely on any central authority.

Data, Data, Data

The ubiquity of streaming means that it’s often difficult for services to differentiate themselves. If streaming service A has almost the same catalogue as streaming service B and charges a similar price, deciding between them is often arbitrary. The quest to crack the code of online music discovery and curation seems to hold a big part of the puzzle in coming out on top in streaming.

Spotify’s Discover Weekly app has been perhaps the most successful use of listener data. The weekly playlist of around 30 songs is created by an algorithm that breaks listening habits into granular genres and profiles each user’s individual taste. The playlist is designed to feel like it’s come from your best friend and represents just how well Spotify know their listeners. Between June and December 2015, Discover Weekly songs had been streamed 1.7 billion times.

For You is Apple Music’s equivalent to Discover Weekly. It takes a more human approach to employing data to inform curation. Along with Beats 1 radio, Apple Music employs hundreds of music editors to build playlists on the basis of past listening behaviour.

Consumers are used to being able to access content when they want. Fans will inevitably find a way to get what they want, legally or illegally

Of the two, Spotify’s job is arguably easier. They’ve been in the streaming game longer and have a larger time span of their listeners’ tastes. Apple Music had a total of 15 million users, 6.5 million of whom pay. Spotify with their 75 million active users, of which 20 million are subscribers, seems to be winning the numbers game in any case.

Regardless of who’s winning, what’s clear is that providing a personalised and curated streaming experience on the basis of past listening behaviour is key. After all, revelation is a growing trend for today’s consumer. Consumers are looking for that chance encounter in an environment that’s become increasingly prescribed. They’re looking for personalisation and a sense of intimacy to what they consume.

Intimacy in Music

A couple of years ago the album brought with it a certain sense of intimacy. It was a tangible product often populated with art. You could pull out the front cover and open the sleeve to uncover lyrics, blurbs, messages and more. For the truly dedicated, fans could even get their albums signed by the musicians themselves. In many ways, the album was the symbol of intimacy between artist and listener.

Today, we still have meet and greets, and the appeal of the concert shows little sign of abating, but the intimacy embedded in the album seems to have dissipated. Unsurprisingly, mass ubiquity has a nasty habit of normalising a product, making it less special in the process. One of streaming’s biggest hurdles is uncovering a way to reinject that intimacy and uniqueness into the listening experience.

Lately, exclusive album releases have become trendy in engaging listeners on different platforms. Kanye West’s The Life of Pablo is perhaps the most notable example. West’s album was released exclusively on Tidal in a push to drive subscriptions to the streaming service where he’s a stakeholder. Although subscriptions have increased, over half a million pirated copies of the album were downloaded within the first 24 hours of its release.

Premiering new content exclusively via one platform may bring a sense of exclusivity, but in the race to gain subscriptions in streaming seems counter-intuitive. Consumers are used to being able to access content when they want. Fans will inevitably find a way to get what they want, legally or illegally.

For bigger artists, they’re trying to figure out a way to engage with fans... They already have a fan base, they just want to engage them and retain them and be able to sell out shows Cédric Cobban, PeerTracks

If exclusivity in the form of music access isn’t working, what is? Cobban says the model to re-inject intimacy into music streaming is access, not in terms of the content, but rather the artist. PeerTracks allows users to purchase artist coins which can then grant them various levels of access to the artist. For example, if you own X number of Rihanna’s coins you can send her direct messages, or if you own Y number of Drake’s you can get early access to his concert ticket sales.

“For bigger artists, they’re trying to figure out a way to engage with fans,” says Cobban. “They already have a fan base, they just want to engage them and retain them and be able to sell out shows, sell out concert tickets and merchandise.” PeerTracks is still in beta testing so only time will tell whether this method proves successful or not”.

Apple Music has also attempted to create a more intimate streaming experience. The Connect tab on the platform allows users to follow artists and publishers (Pitchfork, Vice, etc.).

As a fan, you follow your favourite artists to see their posts, which you can comment on. Apple saw Connect as a special club for exclusive tracks, raw lyrics and behind-the-scenes insights. However a big problem is that artists aren’t regularly updating their pages. Many musicians are posting barely once a week and the content they do post is generally rehashed from other platforms.

The Next Step

“The distributors like Spotify and Apple need to differentiate themselves,” says Bargfrede referring to the future of streaming. “Netflix has moved into content creation, and I think you see streaming services start to realise that the music market is not singular. Maybe what a 20-year-old college student and what a 75-year-old grandmother want in their subscription music offerings are very different.” Is this the key to streaming’s success? Acknowledge the differences in consumers and cater to them.

What’s clear is that streaming has to evolve. Major players like Spotify and Apple Music may be winning but issues like artist payment, listener curation and added extras are all pertinent problems for which other streaming services are providing solutions.

Introducing more video content, live streaming, and creating instantaneous, intimate experiences will help to create a compelling value proposition for both artists and fans. What exact shape streaming’s future will take is unclear but what’s certain is to get ahead it needs to adapt and respond to both the needs of its users and those that create its content.