We are in the midst of a transition from ownership to access models but it is a shift that will take a generation to complete. The intervening years will all be about managing the transition, both in terms of educating consumers but also with regards to ensuring that the revenue shift is as smooth as possible. The download and the stream will co-exist for many years – especially in many emerging markets – and Apple’s iTunes Radio is a key example of how the two technologies can live side by side. But more still needs to be done. To that end what follows is a product strategy proposal that puts streaming into the very heart of download experiences while simultaneously driving download spending.
The Hybrid Album is a very simple and straightforward proposition:
- Entire album download: when ever a download store customer purchases more than one individual track from an album the entire album and album art will download to the purchaser’s device. The two track threshold is important as this proposition is not intended to swim against the tide and clutter the path for consumers that only ever want to buy single tracks. Buying more than one track from an album though indicates a little more than passing interest in that album and represents an opportunity to engage the buyer with the entire release.
- Two free streams per track: the purchased tracks will behave as normal downloads, the remainder of the album though will be presented with a stream icon that informs the purchaser that all the other songs on the album can be streamed free of charge, twice each. Once any track has been streamed twice the icon will change to a click to buy icon. Also when any single track has been streamed twice a ‘complete this album’ call to action will appear with a ‘save x% if you buy within the next 24 hours’ or ‘get an extra exclusive track free if you buy within the next 24 hours’.
And that is it. Very simple but with the potential to be highly effective. It gives download customers a taste of the on-demand streaming experience but directly drives spending. The licensing that would underpin the Hybrid Album will be more complex than the consumer proposition but it is not exactly an insurmountable challenge, with plenty of analogous precedents to leverage.
It is a proposition that is comparatively simple to implement and with low risk. Let’s get it done!
Music Industry Blog 
Interesting proposal as usual …
a couple of comments …
1) re ‘entire album download’ – I suggest this would exclude compilation albums
A purchase of 2 tracks from a 100+ track compilation would have serious impact on all retailers based on this model if included and does not really show an interest in an artist. (probably Various Artists for most compilations)
2) the concept is feasible but implementation at the retail end would be a challenge for all
– How many retailers currently have a download and streaming store?
– Some have an up-sell buy button from a stream but you are driving this from a download to a streaming usage – not streaming to download
– If only a few big retailers can implement, labels may not like the future dependent on ‘the few’
Not insurmountable issues though
Pete – yes I should have clarified – this intended for artist albums only. With regards to partners, immediate options include iTunes, Amazon and 7Digital. iTunes, and to a much lesser degree Amazon, already account for the vast majority of download sales so partnering with them first would simply be a case of working with the established market rather than squeezing out challengers. Amazon, Apple and 7Digital all have various streaming capabilities and of course all digital retailers provide 30-90 second streamed previews. The step up to full song streams for those without existing cloud architecture will be significant and for those with it there will be extra capacity demand. But any digital music retailer with aspirations to still be relevant over the next 5 years is going to have to make that investment some time sooner rather than later anyway.
Interesting. If I only wanted those two songs though, chances are I’ve already sampled the entire album somewhere else (you-tube, Spotify, Rdio) and are now picking the songs I like best. This is the hallmark of the casual music fan who unfortunately drives the lions share of the business. The hard core music fan will already have bought the vinyl (deluxe pkg), the entire digital album download and is streaming it from their paid streaming service account on their smartphone. Why force someone to take music they don’t want? Does streaming really need any help and do you really think it will take a “generation” for it to be adopted by the masses. Netflix has already changed the TV landscape after only a few years and back in the day Napster destroyed the music industry seemingly overnight, albeit with an illegal model, but when something works, people like it, and it fills a need, change will follow. Your model above brings to mind something Thom Yorke recently said to describe Spotify. It’s ‘the last desperate fart of a dying corpse’. In the end it will more than likely be Spotify and others that will come out on top. The labels aren’t stupid,(well…not for extended periods anyway) they know which way the wind blows.
It’s definitely an interesting concept Mark.
My biggest concern with this approach is customer education. As a retailer with both a streaming service and a download store, my biggest challenge is attempting to try new and innovative things to spur digital growth, while trying to keep things as simple and easy-to-use as possible. While many of us in the industry fully understand what you are describing here, I have found that the mass majority aren’t as tech-savvy as we would like them to be. And if they don’t grasp or understand this concept right away, then the uptake for this approach can be long.
The second concern I have is the administrative mechanics of it all. Streaming and digital downloads require two different licenses, each with their own set of reporting guidelines and content restrictions that must be adhered to. Proposing this type of platform would take some ‘coaxing’ in order to be able to apply the licenses required – and in my experience, any type of coaxing costs money, both in legal fees and in upfront minimum guarantees.
That said, I love innovation and I love challenges…and one of my favorite things about my job is being able to hear and see all the different ideas and emerging technologies that push the music industry forward.
Dave – Netflix has undoubtedly had great early success but it’s global subscriber count is 40million while the US pay tv market (Netlifx excluded) numbers north of 80million. I know the comparison is not truly like for like but it helps illustrate that a company can be hugely disruptive, and successful, but it takes a LONG time for something to go truly mainstream. Streaming subscriptions have been going since the early 2000’s yet they remain dramatically smaller in customer count than downloads. Streaming subscription adoption is accelerating but it will not be mainstream anytime soon, for many reasons I have highlighted on this blog previously.
None of this is designed to force anyone to do anything, but instead to let music buyers understand the whole context of the album they are cherry picking. nothing is being forced on them. In fact they are being given the opportunity to listen to the entire album twice, for free. The calls to action to purchase are optional, and remember we’re talking about marketing to music buyers here, people who have already paid to download some of the album, not free tier users. So the push back will be far less than attempts to upsell free tier streaming users.
Finally, this is about aiding the revenue transition and helping give the downloaded album some of the clothes of streaming. It is the exact opposite of Thom Yorke’s flatulence, instead of trying to prop up an old business it is trying to help the old one lead directly to the new one.
Allan – your points are very valid. The intent of the Hybrid Album is that it is simple in the extreme for these exact reasons. The marketing message is simple: “Buy 2 tracks, listen to the entire album twice for free”. If they don’t want to purchase then fine, the tracks could remain greyed out with click to buy icons or removed entirely. The ‘complete my album’ functionality is becoming increasingly well understood by mainstream users so hopefully this wouldn’t be a leap into the dark for them.
As for licensing – yes there are complexities, which I alluded to in the post. I don’t want to underestimate them, because they are clearly challenging, but for those stores with licensed cloud and streaming services, some of the licensing ground work has already been done.
“..instead of trying to prop up an old business it is trying to help the old one lead directly to the new one.” Which business are we trying to lead here though? The labels? They’ve shown time and time again that they follow the money or else they wouldn’t have stopped selling Vinyl (superior sound quality) and started selling cassettes. They knew they sucked audio wise but they also knew the public demanded portable devices, that’s why they went to CD’s after that and now with MP3’s. Same reason they’ll drop an artist like a rotten egg and sign everyone who sounds like Mumford and then drop them when the next fad comes along. They may never be ahead of the curve but they know how to ride the coattails and survive. On a side note the labels are the ones who should be going out there and demanding that the streaming services pay more for their clients music, you can thank Apple for making everyone think $1 is a fair price for a song, but I digress. The labels will be fine, so is it the retailers we’re trying to save? Hate to say it but sometimes it’s just time to call it a day. Kodak ignored what was happening in the world and are now bankrupt, ditto Blockbuster. HMV seems to just be in the movie business these days with a little space for graphic novels and have moved into the online retail and now streaming service as well. There will always be a niche market for physical sales but the days of a record store on every block are long gone and not coming back. An article in the Guardian with Dave Stewart made some great points.
“Stewart now says Spotify’s problem lies with its low number of subscribers (currently standing at more than 6 million globally, according to the company). “It’s a volume business. If they had 100 million subscribers, which is possible, the payment [for the Eurythmics catalogue] would be equal to the band’s income back at the peak of selling,” he claims, adding that the way money is distributed by the labels to the artists is another problem.”
Dave Stewart: Thom Yorke was wrong – songwriters should worship Spotify http://gu.com/p/3j58q/tw via @guardian
Seems to me maybe it’s time to hit the reset button and instead of looking at the past, it’s time to look ahead. More time should be spent on getting people on the streaming services, to pay for a membership and increase the amount of money an artist makes from those services.
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An interesting new take on try before you buy.
This is somewhat reminiscent of Weed, the now-defunct digital music service that supplied try-before-you-buy digital downloads. It failed because it was dependent on DRM, and Microsoft’s DRM at that.
The implementation here would be fraught with challenges: representing a stream in a file format understood by all media players; tracking the plays, etc. Not impossible, but plenty of speed bumps, and uncertain ROI.
Roger – I’m not convinced it would be difficult to be implemented for a smallish number of retailers that would account for the majority of the installed base of music download sales. For example if you just had Apple and Amazon do this you’d have the majority of the global market covered (admittedly you’d be short on a number of key emerging markets) but given that 56% of digital revenues come out of the US and the UK and that a handful of other key markets such as France and Germany would be well covered these two companies would be a strong start.
Both companies also have streaming integrated directly into their players and stores for their cloud offerings.
It is perhaps a sad reflection of the concentration of the download market among a comparatively small number of companies but the upside is that it makes implementation of things likes this a less daunting task.
I’ll try to download it at home and will harness the most important idea that I can be able to apply on my company. It’s good to have this around hanging. Thank you for this.