UN prepares to airlift badly needed calculators and behavioral economics textbooks to Hollywood and Silicon Valley. Above a A Norwegian UN peacekeeping soldier reacts to details of YouTube Music Key deal. Photo by Русский: Фото: Михаил Евстафьев English: Photo: Mikhail Evstafiev (Mikhail Evstafiev)
If only this story were true.
Yet again we are witnessing a catastrophic failure of mathematics and logic by the music business and their digital music partners:
1). If you offer something for free don’t expect anyone to pay $7.99 a month for the exact same product. After a healthy debate over the (bad) economics of free streaming courtesy of Taylor Swift, the record labels and YouTube have doubled down on their losing bet on free streaming with the YouTube music service. Full album streaming will be available on the free service as well as the paid service. So again no reason to upgrade to paying service. Well at least we can “opt out” of YouTube. Right? Can’t we?… I think we can…. (ed note- you can pull your tracks off Spotify but YouTube will hide behind the DMCA act and let their users upload it.)
2.) If you let YouTube have all our music at $7.99 a month how do you tell Spotify and all the other services they have to stay at $9.99 a month? You can’t blame Daniel Ek for being pissed off about the YouTube deal, now can you?
3) Let’s assume that people defy basic economic principles and pay for something they already get for free. Let’s assume streaming scales to as many US customers as Netflix. That’s 36 million subscribers. At YouTube’s rate of $7.99 you get 3.4 billion retail. 2.4 billion at wholesale. The current recorded music business is 7.1 Billion.
4) As the Cynical Musician eloquently notes: If flat fee streaming services really are the future of music consumption, at “scale” we end up with a fixed pool of money for ALL recorded music. This means the pie can never grow and the slices get smaller and smaller as you increase spins and add new albums. This looks like a death spiral. The only way out is to allow windowing. Oh but wait! The YouTube deal doesn’t let you do that!
5). Stop saying that $120 a year from each streaming subscriber is greater than the $71 a year per capita music consumption in 1999. PER CAPITA! Do you know what that means? Per capita means we are counting every single resident of the USA. Including infants and your 90 year old great grandparents. Unless you have a plan to get $120 a year from infants and 90 year old great grandparents please STFU.