What $500 Million And Jay-Z Say About the State Of Streaming In 2015

2014 was a big year for streaming, 2015 will be bigger. Apple entering the fray is the catalyst. Apple enters a market when it is ready for primetime. Apple lets the pioneers establish the market, prove the model and create consumer mindshare before it comes in and most often assumes a leadership role. Apple is certainly leaving it later than normal with subscriptions but it is still the same classic follower model, and the marketplace knows it. Hence Jay-Z’s reported €50 million interest in Norwegian streaming service WiMP and Spotify’s reported pursuit of a further $500 million. The first move is ‘let’s get in a market Apple is about to make huge’ and the second is an Apple war chest

Spotify’s 2014 growth was little short of spectacular, especially its December surge. But it is still not enough to IPO on. Not because 15 million subscribers in itself is not a huge achievement – it is – but because the market place is holding its breath, waiting to see what Apple does. Apple remains the world’s largest digital music company and is on the verge of becoming the world’s leading shipper of smartphones. But most crucially Apple has the iTunes ecosystem and a deep, deep understanding of the world’s most valuable content consumers. If anyone can take subscriptions to the mainstream Apple can. And in the process it will likely take back a chunk of the iTunes Music buyers that Spotify ‘stole’. Which is not to say that Spotify will not be able to continue to grow, but instead that rapid growth will be harder when Apple is snapping at its heels.

Pricing will be key, as will the role of free. If Apple succeeds in bringing the standard price point down to 7.99 (and perhaps a subsidised price point of 4.99) then a whole new swathe of users will be brought into the marketplace. Still not the mainstream, but certainly getting towards the higher end of the mainstream that Netflix competes in. And certainly a bigger marketplace than the current one. If Spotify finds its free tier heavily capped then it will lose much of its customer acquisition strength, which may force it to spend more heavily on traditional acquisition tactics like app marketing and TV ad spots.

In this expanded marketplace a $500 million war chest would give Spotify the ability expand into new territories, double down on churn management and market in core markets. The intent will most likely be to weather the Apple storm and to be in solid enough shape the other end to IPO. As we have seen in the smartphone and tablet business, Apple can be leader but still leave plenty enough space for a vibrant and competitive marketplace. That is the scenario Spotify, Deezer, Rdio, Rhapsody and Jay-Z’s new plaything-to-be WiMP will be hoping for.

8 thoughts on “What $500 Million And Jay-Z Say About the State Of Streaming In 2015

  1. Pingback: A Journal of Musical ThingsJay Z Just Dropped $56 Million to Buy High-Res Audio Streaming Service TIDAL - A Journal of Musical Things

  2. Pingback: Best of 2014: Music | Silicon Valleywood

  3. Based on the past couple of decades, I’d say internet services and software seem to tend strongly towards winner-take-all, or at least duopoly, outcomes compared to hardware. I don’t see there ultimately being a lot of breathing room outside of Apple, Google, and Spotify (which has current mindshare) unless there’s clear differentiation or one of the prior slips up badly. Sure, Tidal has the HD thing, but supposedly Spotify will release its own version soon. Other than that none of these services has been able to make a clear, compelling case.

    One thing I’d like is a service that opens faster than Spotify on the web, but surely Youtube Music Key All Access Pass or whatever will be good for that (though the Google Play experience gives me some pause).

  4. Pingback: Jay Z Just Dropped $56 Million to Buy High-Res Audio Streaming Service TIDAL | Geeks and Beats Podcast

  5. Pingback: What $500 Million And Jay-Z Say About the State Of Streaming In 2015 | Music Industry Blog | Music Connection- Dayton

  6. This Business of Music is no more about record sales. Now the business is more about Touring, Endorsements and Merch sales. But artist do need promotion for that. Streaming gives them the platform to get promoted, get discover, get listened…

    Check my posts PROS & CONS DISTRIBUTION SITES (ITUNES, GOOGLEPLAY, AMAZON, SOUNDCLOUD) and HOW SOCIAL MEDIA PLATFORMS AID DISTRIBUTION SITES in my blog http://www.leyregranda.com

    Thanks for the article!

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