Making Free Pay: Finetuning Freemium

Streaming is transforming music and TV business models, driving growth in both audiences and revenue. A balance between free and paid tiers and services has been key to this success, but, growth is not always balanced, and as we approach maturity in many western markets, more may be needed of free, ad supported options. Likewise, for unlocking longer-term, larger-scale growth in emerging markets.

MIDiA Making Free Pay

We know these issues matter, but we also know it can be hard to plan for the next phase when there is so much activity and resource requirement being delivered by the current phase. Therefore, to help media companies and streaming services alike, we have put together a curated insight event to provide the definitive evidence base for setting the balance between free and paid.

Join us for this free event, to see exclusive, previously unseen MIDiA data presented by our Research Director Tim Mulligan and a panel of industry experts tackle the burning questions. This event will help you understand:

  • Just how big will streaming music and video advertising get?
  • What is the right balance to strike between free and paid?
  • How will this balance vary across different regions across the globe?
  • How many more consumers will make the path from free to paid?
  • Why are streaming audiences so interesting to advertisers and how can they reach them?
  • What impact will the tech majors’ domination of global ad revenues have on streaming services?

The event is free to attend, and will be in central London on the 17thOctober. Places are limited though and going fast, so be sure to sign up soon if you plan to come.

As a sneak peak, here is one snippet from Tim’s presentation:

midia making free pay data

TV and music have a long history in ad supported via broadcast TV and radio. Both also have had the opportunity to convert an unprecedented volume of consumers to subscription relationships through streaming. The focus right now is all on subscriber growth, but the flatten out phase of the s-curve will come and when it does, ad supported can, and should, pick up the baton and run with it. The challenge is how to do that without unravelling subscription revenue.

Both music and video will follow a similarly shaped growth trajectory over the coming years in terms of advertising’s share of total revenue. However, music will lag far behind with just 38% of streaming revenue coming from ad revenue in 2025, compared to 56% for video. This will reflect both the positive and the negative. On the plus side, music will be generating strong subscription revenue in 2025, thus commanding much of the revenue share. However, it will also be generating much less annual ad revenue per user (ARPU) in 2025 than video: $4.69 compared to $20.37. In fact, video will see ad supported ARPU nearly double by 2025 from 2017, while music will add just one dollar.

This reflects multiple factors, including:

  1. Social video (YouTube, Instagram, Snapchat, Facebook) will generate far more ad supported video revenue than it will ad-supported music revenue
  2. Video ads command a higher ad rate than audio ads
  3. TV ad budgets are much bigger than radio ad budgets, and their transition to streaming will accelerate video ad revenue growth
  4. Few music services have scaled their ad sales outside of the US (though some encouraging signs are occurring there)
  5. Emerging markets will be key drivers of ad-supported music audiences, but digital ad markets will take time to get established

Ultimately, streaming ad growth will be shaped in equal measure by traditional ad market dynamics, and the tech and ad sales capabilities of the streaming services in each and every respective market. This means that in many markets we will see free audience growth far outstrip ad revenue growth. Just one of the many challenges posed by a growing ad supported streaming sector.

Join us on the 17thfor this and much more – see you there!

State of the YouTube Music Economy 2.0: A Turning Point for All Parties

YouTube is the most widely used streaming music app globally but it is also the most controversial one, locked in a perpetual struggle with music rights holders, with neither side quite trusting the intent of the other. 2018 has already seen YouTube’s renewed focus on subscriptions as well as a European Parliament vote that could potentially remove YouTube’s safe harbour protection. Meanwhile, oblivious to these struggles, and despite the rise of audio streaming services, consumers are flocking to YouTube in ever greater numbers and, crucially, using it for music more than ever before. Back in 2016, at the height of the value gap / grab debate, MIDiA published its inaugural State of the YouTube Music Economy report. Now two years on we have just released the second edition of this landmark report. MIDiA clients have immediate access to the ‘State of the YouTube Music Economy’ report, which is also available for purchase on our report store. Here are some of the highlights from the report.

state of the youtube music economy midia research

2016 proved to be a pivot point for YouTube. Rights holder relationships were at an all-time low with value gap / value grab lobbying reaching fever pitch. Meanwhile, vlogger hype was also peaking and longer-form gaming videos were beginning to get real traction. If there was ever a point at which YouTube could have walked away from music, this could have been it. The picture though, has transformed, with YouTube doubling down on music and in doing so, making itself an even more important partner for record labels.

With young consumers abandoning radio in favour of streaming, YouTube is the biggest winner among Gen Z and Millennials; penetration for YouTube music viewing peaks at 73% among 16–19 year olds in Brazil. But its reach is even wider: YouTube is the main way that all consumers aged 16 to 44 discover music.

Doubling down on music

YouTube has responded by improving its discovery and recommendation algorithms and gearing them more closely to music. The combined impact of demographic shifts and tech innovation is that YouTube is making hits bigger, faster. Billion-views music videos used to be an exceptional achievement, now they are becoming common place. By end July 2018, Vevo reported that there were already ten 1 billion views music videos for tracks released that year, accounting for 17.2 billion views between them. One billion view music videos that were released in 2010 took an average of 1,841 days to reach the milestone. Videos released five years later took an average of just 462 days, while those from 2017 took an average of just 121 days to get to one billion views. Over the course of eight years, YouTube has become more than ten times faster at creating billion-view hits.

Under indexing

The impact on revenue is less even. Music videos are the single most popular video category on YouTube, accounting for 32% of views but a smaller 21% of revenue. Music is still the leading YouTube revenue driver with $3.0 billion in 2017 but many other genres, gaming especially, over index for revenue. (Many YouTube gamers have multiple video ads placed at chapter markers throughout their videos. Because music videos are shorter they get a smaller share of video ads.) Emerging market audiences are also pulling down ad revenues. The surge in Latin American markets has pushed artists like Louis Fonsi to the fore, but the less-developed nature of the digital ad markets there means less revenue per video. This trend is accentuated with the rise of emerging markets music channels like India’s T-Series becoming some of the most viewed YouTube channels globally.

The net result is that effective per stream rates are going down on a global basis, but are going up in developed markets like the US, where the digital ad market is robust. This brings us to one of the existential challenges for YouTube. What does the music industry want YouTube to be? After years of nudging by labels, YouTube is now embarking on a serious premium strategy, but is that really what YouTube is best at? What YouTube does better than anyone else in the market is monetise free audiences at scale on a truly global basis (China excepted).

A turning point

2018 is a turning point for YouTube. The accelerated success it and Vevo have enjoyed since 2016 over indexes compared to YouTube as a whole, which means that music is a more central component of the YouTube experience than it has ever been. However, driving impressive viewing metrics was never YouTube’s problem, convincing music rights holders that it is a good partner is. The value gap war of words may have died down a little but that is as much a reflection of the rise of audio streaming and a return to growth for record labels than anything else, as the European Parliament’s Article 13 vote highlighted. Safe harbour was never designed to be used the way YouTube does for music, and the fact it does so creates a commercial disincentive for other streaming services to play by music rights holders’ rules. The fact that YouTube can get a greater volume of rights and more cheaply than other services andbe the largest global streaming service unbalances the streaming market. Though against this must be set the fact that YouTube has been able to create a more rounded value proposition without operating within the same confines as other streaming services.

The music industry needs the YouTube-Vevo combination, especially while Spotify scales its global free audience. The road ahead will be rocky, especially if Article 13 is eventually passed and also if rights holders continue to be disappointed by engagement growth out accelerating revenue growth due to the growing role of emerging markets. But it is in the interests of all parties to make the relationship work because neither side wants a YouTube shaped hole in the streaming marketplace, even if a Facebook / Vevo partnership was to try to fill some of it.

Screen Shot 2018-08-24 at 16.54.06Click here to see more details of the 29-page, 6,000 word, 11 chart reporton which this blog post is based. The report is based upon months of extensive research, industry conversations, MIDiA data and proprietary company data and represents the definitive assessment of the YouTube Music Economy.

Radio Is Streaming’s Next Frontier

This week MIDiA held its latest quarterly research and networking event at Gibson Brands Showrooms in the heart of London’s West End. The event was heavily over-subscribed and was a great success (there are some photos at the bottom of this post).

The event combined a presentation from Pete Downton, deputy CEO of our event sponsor 7digital, a keynote from myself and a panel of leading industry experts. Here are a few highlights of my presentation.

radio blog slide

Streaming music has got where it has today largely by being the future of retail and replacing the download model, which in turn replaced the CD model (though vestiges of both remain). That premium model will continue to be the beating heart of streaming revenues for the foreseeable future but will not be enough on its own. The next big opportunity for streaming is to become the future of radio, which incidentally is around double the size of the recorded music market. In doing so, it will be a classic case of disruptive insurgents stealing market share from long-standing incumbents.

The opportunity for streaming is to build ad revenue around the younger audiences that are simply not engaging with traditional radio in the way that previous generations of young music fans once did. As the chart above shows, radio’s audience is aging and has an almost mirror opposite demographic profile to streaming. What is more, radio’s audience is declining by around one percentage point each quarter. It might not sound like much, but you normally do not measure change in terms of consistent quarterly trends. Instead there is normally quarterly fluctuation. So, this is nothing short of a major decline.

However, what is interesting is that free streaming is not growing by the same rate radio is declining. Instead, what is happening is that radio and streaming audiences are co-existing, with many that have spent a long time doing both eventually shifting all of their listening to streaming. Added to this, older consumers tend to embrace change more slowly than younger audiences. So, radio’s older listener base effectively acts as a disruption buffer.

What all this means is that radio is facing an existential threat like no other but it has some time to get its house in order, to identify how it can meld the best of the radio model with streaming experiences to start its fight back. And make no mistake, radio has so many unique assets that streaming does not (local content, talk, news, sports, weather, travel, brand personality etc.) and Apple’s underwhelming success with Beats 1 shows that hiring a bunch of radio people and launching a station does not guarantee success. Nonetheless, streaming services will get there. And Spotify’s recently launched Pandora-clone in Australia indicates just how serious the radio frontier is to streaming.

For more (a lot more!) data and analysis on how radio and streaming are facing up against each other, check out our new report Radio – Streaming’s Next Frontier: How Streaming Will Disrupt Radio Like It Did Retail which can be purchased directly from our report store here and is also available immediately to MIDiA clients as part of our research subscription service.

MIDiA Radio Event 1MIDiA Radio Event 2

Streaming Hits 67.5 Million Subscribers But Identity Crisis Looms

MRM1601-fig1 for blog

For our recently published MIDiA report ‘State of the Streaming Nation’ we conducted an exhaustive programme of research to assess the global streaming music market, from each of the consumer, market and service perspectives. In pulling together subscriber numbers for each of the music services (there’s a full table in the report) we found that there were 67.5 million subscribers globally in 2015. That was 24 million more subscribers compared to 2014 (also nearly double the number of new subscribers in 2014). It is clear that global subscriptions are gathering pace. However, all is not as it may at first appear:

  • Zombies still walk the streaming streets: Back in 2013 I ruffled a few feathers highlighting the issue of zombie subscribers, music subscribers that are recorded in the headline numbers but that are actually inactive, normally because they are on telco bundles. Fast forward to 2016 and the issue is more firmly in the public domain due to Deezer’s IPO filings. Zombies coupled with overstating by music services accounted for around 12 million subscribers in 2015 so the active ‘actual’ subscriber number was nearer 55 million.
  • Emerging markets are gaining share: Emerging markets will play a key role for streaming over the next few years. They are already driving growth for Apple and Spotify and they will collectively bring the most dynamic growth with western markets nearing saturation for the 9.99 price point. Much of the growth though will come from indigenous companies, such QQ Music (China), KKBOX (Taiwan), MelOn (South Korea) and Saavn (India).
  • Free still dominates: For all the scale of of subscriptions, free still leads the way with free streaming services accounted for nearly 600 million unique users (1.3 billion cumulative users if you add together the user counts of all the services). Free thus outweighed paid by a factor of 10-to-1.

Streaming’s Identity Crisis

Streaming must overcome its identity crisis. Depending on where you sit in the music industry, streaming is either the future of retail or the future of radio. It can be both, but there is increasing pressure for it to be retail only. That would see only a fraction of the opportunity realised. Throughout its history, a small share of people have accounted for the majority of spending. Casual buyers and radio accounted for the rest.

17% of music buyers account for 61% of spending. These are the people who are either already subscribers or that will become subscribers over the next couple of years. Which leaves us with the remaining 83% of consumers. The majority of these listen to radio while a growing minority use free streaming (mainly YouTube). The question the music industry must now answer is how seriously does it want to treat the opportunity represented by these consumers? Does it want to only serve its super fans or does it also want to be global culture? Radio enabled music to be global culture in the 20th century, free streaming will enable it to be in the 21st.

The Free Streaming Debate Is As Complex As It Is Nuanced

This is why the free streaming debate is important but also so complex. Yes, too much free music will curtail the opportunity for paid subscriptions, but too little could consign music culture to the margins. With streaming there is an opportunity to monetize a bigger audience at higher rates than radio ever enabled. At the moment free streaming bears the burden of being all about driving sales (either subscriptions or music purchases) but that misses the far bigger opportunity for free in the streaming era: mass monetization.

What we have now is a dysfunctional system. Freemium services have licensing minimas (the minimum that must be paid per stream) that effectively prevent them from building profitable ad supported businesses, while YouTube has licenses unlike any other but is the industry’s bête noire. Only Pandora has a model that is both (largely) acceptable to the industry and (theoretically) profitable. I say, ‘theoretically’ because Pandora could get towards a 20% margin if it wasn’t investing so heavily in ad sales infrastructure and other companies.

Out of those three disparate models an effective middle ground can and should be found so that the streaming debate becomes one of free AND paid rather than free VERSUS paid. Then we will have the foundations for creating a market that enables subscriptions to thrive within their niche and for global audiences to be monetized like never before.

What’s Going On With Free Streaming?

Earlier this week Soundcloud’s financials revealed that the company was haemorrhaging cash (even before it had to start worrying about content license fees). Now news comes that Pandora is working with Morgan Stanley to meet with potential buyers. Back in Q4 2014 free streaming got a stay of execution when the majors decided to put their weight behind freemium after a period of many executives seriously considering canning the model. In 2015 free streaming was the growth story, with YouTube out performing everyone. Now though free streaming looks to be in seriously troubled waters. So what gives?

Pandora’s Problem Is Wall Street

Probably the biggest problem of all that Pandora has is the story it tells Wall Street. Every year Pandora accounts for a little bit more of total US radio listening, builds ad revenue and steadily strengthens its business. But that’s not the sort of story Wall Street expects from a streaming media company. Investors expect dynamic growth. But Pandora is, along with Rhapsody, the granddaddy of streaming and had 10 million users before Spotify was even launched in Sweden, let alone the US. Pandora long since passed its dynamic growth stage in the US and is now a mature business that is going about sensibly building a sustainable business.

The standard thing to do at this stage for streaming companies is to roll out internationally and find new markets where you can start a new dynamic growth story. This is exactly what Netflix is doing now that US subscriber growth has slowed. The approach has also served Spotify well. But the unique compulsory licensing structure in the US the underpins Pandora’s business model does not exist elsewhere. There is no global landscape of SoundExchanges for Pandora to plug into. With the exception of Australia and New Zealand Pandora has not been able to negotiate rates that it launch internationally with.

Actually, Slowing Growth Is A Problem Too 

All of which explains why Pandora has gone down the acquisition route, buying Next Big Sound, Ticket Fly and Rdio in a bid to become a full stack music company. The problem is that Wall Street either does not buy it, or simply does not get it. In fact, Wall Street does not really make much of a distinction between semi-interactive radio or on-demand streaming. The pervasive view among the investor community is that Pandora is being out competed by Spotify, regardless of the fact that there is only partial competitive overlap in terms of value proposition, target audience and business model. The net result is that Pandora’s market capitalization has fallen from $7bn to $1.8bn and to make matters worse it had to raise $500 million in debt, with revenue growth slowing.

Pandora Needs A New Wall Street Narrative

In just the same way Apple needs a new Wall Street narrative, so does Pandora. Even if just to maintain some market value while it finds a buyer. The full stack music strategy should be central to that narrative, even though the real story is that Pandora is the future of radio. Unfortunately that story will take a decade or more to play out and most investors do not have that kind of patience. (Spotify, these are the sorts of problems you’ll be having to worry about this time next year). And, to be precise, it is the Pandora model that is the future of radio, not necessarily Pandora itself.  Though the odds are still on Pandora playing that role, in the US at least.

If Pandora really does not have the stomach for seeing out the long game it should not find it too difficult to find a buyer, if the price is right. Exactly because Pandora is the future of radio, some of those big radio incumbents are likely buyer. Hello iHeart Media.

 

Why Streaming Doesn’t Really Matter For Adele

The outstanding success of Adele’s single ‘Hello’ has stoked up the already eager debate around whether Adele’s forthcoming ‘25’ album is going to be a success.  Indeed some are asking whether it is going to ‘save the industry’. One of the aspects that is getting a lot of attention is whether the album is going to be held back from some or all of the streaming services.  The parallels with Taylor Swift’s ‘1989’ are clear, especially because both Swift and Adele are strong album artists, which is an increasingly rare commodity these days. But the similarities do not go much further.  In fact the two artists have dramatically different audience profiles which is why streaming plays a very different role for Adele than it does for Swift.

Lapsed Music Buyers Were Key To the Success Of ‘21’

Adele’s ’21’ was a stand out success, selling 30 million copies globally.  Core to ‘21’s commercial success was that the album touched so many people and in doing so pulled lapsed and infrequent music buyers out of the woodwork.  The question is whether the feat can be repeated? In many respects it looks a tall ask.  We’re 4 years on since the launch of ‘21’ and the music world has changed.  Music sales revenue (downloads and CDs) have fallen by a quarter while streaming revenues have tripled.  And the problem with pulling lapsed and infrequent buyers out of the woodwork is that they have receded even further 4 years on.  In fact a chunk of them are gone for good as buyers.

buyer streamer overlap

But beneath the headline numbers the picture is more nuanced (see graphic).  Looking at mid-year 2015 consumer data from the US we can see that music buyers (i.e. CD buyers and download buyers) are still a largely distinct group from free streamers (excluding YouTube).  While this may seem counter intuitive it is in fact evidence of the twin speed music consumer landscape that is emerging.  This is why ‘Hello’ was both a streaming success (the 2nd fastest Vevo video to reach 100m views) and a sales success (the first ever song to sell a million downloads in one week in the US).  These are two largely distinct groups of consumers.

Streaming A Non-Issue?

As a reader of this blog you probably live much or most of your music life digitally, but for vast swathes of the population, including many music buyers, this is simply not the case.  Given that the mainstream audience was so key to ‘21’s success we can make a sensible assumption that many of these will also fall into the 27% of consumers that buy music but do not stream.  The implication is thus that being on streaming really is not that big of a deal for ‘25’ one way or the other.  Whereas Taylor Swift’s audience is young and streams avidly, Adele’s is not.  That is not to say there aren’t young Adele fans, of course there are, but they are a far smaller portion of Adele’s fan base than Swift’s.

60% of 16-24 year olds stream while just 20% buy CDs.  Compare that to 40-50 year olds where 34% stream and 43% buy CDs.  These are dramatically different audiences which require dramatically different strategies.  Audio streaming is unlikely to be a major factor either way for Adele, neither in terms of lost sales nor revenue.  Unless of course she ‘does a Jazy-Z‘ or ‘does a U2’ and takes a big fat cheque from Apple to appear exclusively on Apple Music.  But I’d like to think she’d like to think she’d have the confidence of earning sales the real way.

The Importance Of The Digitally Engaged Super Fan

What unites Swift and Adele is that they are both mass market album artists and as such are something of a historical anomaly.  Swift bucked the trend by making an album targeted at Digital Natives shift more than 8 million units.  Adele will likely also buck the trend.  But paradoxically, considering the above data, in some ways it will be a harder task for Adele.  Swift has a very tightly defined, super engaged fan base that identifies itself with her.  Adele’s fanbase is more amorphous and pragmatic.  You don’t get ‘Adelle-ettes’.  Swift was able to mobilise her fanbase into music buying action like a presidential candidate with a passionate grassroots following and big donors.  The importance of digitally engaged super fans is the secret sauce of success for digital era creators.  It is the exact same dynamic that ensured UK YouTuber Joe Sugg was able to leverage his fanbase to give his debut book ‘Codename Evie’ the biggest 1st week sales for graphic novel EVER in the UK this year.

If Adele and her team do pull off a sales success with ‘25’ they will owe a debt of gratitude to that 27% of consumers.  While the odds are against it being quite as big as ‘21’ (simply because the market is smaller) it still has every chance of being a milestone event that will out perform everything else.  But do not mistake that for this being ‘Adele saves the music industry’.  Album sales are declining.  Success from Taylor Swift and Adele are (welcome) throwbacks and they are most certainly not a glimpse into the future.

Ad Supported Is 56% Of US Streaming Revenue

Late 2014 a minor crisis emerged in the music industry, with major record labels at one stage looking like they were going to kill off freemium.  The outcome of the Freemium Wars was actually less dramatic, resulting instead in an effective continuation of the status quo.  The labels had however made it very clear to Spotify who held the whip hand.  Though their tones have softened, major label execs retain an at best sceptical view of free streaming.  The net result is that freemium has almost become the inconvenient streaming truth that no one really talks about.  However free is too big to ignore.  In fact free is much bigger than some would like to admit.

freemium what freemium

According to the IFPI ad supported streaming accounted for just 19% of all US streaming revenues in 2014, down from a high of 30% in 2011.  Which points to the success of subscriptions.  Except that those numbers ignore a major part of the equation: Pandora (and other semi-interactive radio services).  The IFPI has Pandora hidden away with cloud locker services, SiriusXM and a mixture of other revenues in ‘Other Digital’.  Extracting the semi-interactive radio revenues that count as label trade revenues wasn’t the most straight forward of tasks but it was worth the effort.  Once Pandora is added into the mix it emerges that 56% of US streaming revenues are from free, ad supported services.  While that share is down from a high of 66% in 2012 it remained flat in 2013 and 2014.  Which means that however fast subscriptions grew Pandora, Slacker, Rhapsody UnRadio and co grew even faster in order to offset the decline in on demand ad supported income.

us subscriber growth and pandora

Semi-interactive radio revenues grew by 40% in 2014 compared to 35% for subscriptions.  Subscriptions had grown much faster in 2013 (76% compared to 25%) but Pandora and co found their mojo again in 2014.  None of this is to suggest that subscriptions aren’t making great progress but it does show us that free is more than an inconvenient truth, it is both the most widely adopted behaviour and the largest revenue source in the US (which accounts for 48% of global digital revenues).

The music industry is beginning to get its head around the fact that the role of streaming as a retail channel (i.e. subscriptions) is always going to be smaller (in reach terms at least) than its role as a radio channel (i.e. free streaming).  This more accurate view of the US streaming market shows us that free is even more important than many thought.

Free streaming also has much bigger growth potential. The percentage of consumers that have the inclination to pay 9.99 a month for music is inherently limited, thus constraining subscriptions to a niche addressable audience.  Music radio listening by contrast has near ubiquitous reach.  Most significantly Pandora currently only represents about 10% of all US radio listening time.  The addressable market is much bigger and the vast majority of it remains untapped.

Soundcloud Edges Towards Making YouTube The Odd One Out

Soundcloud took another step away from being an ‘under licensed’ service to a ‘fully licensed’ one with its deal today with indie licensing body Merlin. This follows on the footsteps of deals with Warner and the National Music Publishers Association. Soundcloud is a long way yet from being out of the licensing woods but momentum is clearly building. Most importantly though, Soundcloud is inadvertently playing the role of ice breaker in the new wave of deals for sites that traded as promotional sites in the download era and are having to, willingly or not, accept a new role that looks and feels a lot more like a straight forward streaming service.

Merlin’s CEO Charles Caldas nailed it in this quote from an interview with Music Ally:

As the value of the streaming market grows, people are starting to realise that consumption is the new sales. Anywhere that people are listening to music is actually the end-game now. This notion that everything is promotional: that way that people used to talk about YouTube as a ‘promotional channel’. When that becomes the destination for music fans, it needs to compete in the marketplace with all the platforms that are monetised,” said Caldas.

Soundcloud always had a lot of goodwill within the indie community and indeed even within the marketing and A&R departments of majors because of its roots as a platform for helping labels, artists (and more recently) fans interact more effectively. The labels’ commercial affairs teams however have been far less enamoured, instead asking why Soundcloud should be able let people listen for free, on demand, without licenses when others can’t.

The role of standalone promotional streaming services made sense when everyone was still buying music, but with download sales and CD sales both on the slide globally the model is less obvious. The discovery journey has also become the consumption journey but the change is happening so fast that it is easy to confuse the two. This is why we have the paradoxical situation where 10 million streams on Spotify is considered to be x amount of lost sales while 10 million YouTube views is considered a marketing success. Right now a large chunk of digital marketing activity that is driving streams on YouTube and Soundcloud is tactic without purpose. It is marketing for marketing’s sake without a clear enough sense of what the end goal is.

This is why Soundcloud needs to get these deals in place. It will completely transform the commercial dynamics of Soundcloud, and there will undoubtedly be disgruntled artists and fans, but the music world has changed and it needed to also. All of which leaves YouTube the odd one out without a chair to sit on when the music stops.

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An honourable mention goes to Songkick who today announced a merger with Crowdsurge and a combined raise of $16m. Congrats to Songkick and Crowdsurge co-CEO Ian Hogarth who is one of the smartest minds in the music industry.