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Streaming May Have True Potential After All!

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After reading David Lowery’s guest postHow To Fix Streaming Music’s Business Model” which was featured on Hypebot, I have truly changed my mind about how I feel about streaming services. When the streaming service model is changed, it brings fair ground to all parties involved. David talks about Spotify being a bad business model that has unsustainable economics and I agree with him. These business models make it hard for others to see the true potential that streaming services have. I still do not feel like streaming is the end all be all, that others may think. He goes on to say that a successful streaming service must build and increase their subscription members. Also, that the subscriptions must be based on new pricing tiers. He explains what we already know that streaming services want to give their service away. These services subsidize artists and devalue music. These bad business models leave subscribers on the freemium level, never to graduate the subscriber to paying for the service.

This is where transactional streaming comes into play; this alone would help the transaction between freemium subscribers into paying. David points out that streaming services should not have every title ever released, for one fixed price. The consumer should have the choice between low cost limited access to new releases, or pay more for a transactional download. Tiered Pricing would bring more value to the consumer when broken up in bundled packages, which would be grouped by genre and lifestyle; the same way that a consumer would choose their cable package or cell phone plan. The consumer would be able to select packages that tailor to their listening preferences.

The real take away is that the streaming services do not have to give their services away for free to build subscribers. David states that iTunes is one of the most successful dedicated online music businesses ever, and it doesn’t have a “free-tier.”

Daniel Ek and his contributions to uTorrent have made it easy for consumers to steal music. Now with his creation of Spotify he has devalued music and limited the amount of revenue that the music industry can and will make. David makes a great point that companies like Pandora and Spotify are not out to support artists, they are out for the bottom dollar. These services are unsustainable, yet as an industry we buy into business models and their rainbow unicorn school of economics. We must develop business models that work based on real economics, while setting limitations and not a free for all for consumers with establishing fair pricing for all.

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