Netflix Is The Model for Spotify, Watch And Learn…

Ahem… we were making these observations in 2013 when we wrote, “Why Spotify is not Netflix (But Maybe It Should Be)“. In that piece we detailed the practical and philosophical divide between the record business and the film/TV businesses online.

Nowhere is that divide in logic, reason, investment and profit more profound than the differences between Spotify and Netflix. It’s time for the record business to recognize and understand there is a mature digital business model that exists in digital distrbution, and it includes both streaming and capital investment for the development of new works.

Music Business Worldwide Reports:

Netflix is doing a lot of things that Spotify isn’t.

This year, across licensed content and its own original shows, the company will spend $5bn on programming.

It’s just launched in 109 countries, including India, where Daniel Ek is yet to tread.

It boasts around 75m paying subscribers – three times that of  Spotify.

Oh, and it’s turning a profit.

And you know what else, Netflix has NO FREE TIER and rotates inventory MONTHLY.

Watch and learn people. Seriously, it’s not that hard.

READ THE FULL STORY AT MUSIC BUSINESS WORLDWIDE:
http://www.musicbusinessworldwide.com/netflix-is-putting-all-sides-of-the-music-business-to-shame/

 


 

Why Spotify is not Netflix (But Maybe It Should Be)

Has music missed its ‘Netflix moment’? | Music Business Worldwide

Subscription streaming movie service Netflix announced earlier this week that it has reached 62m users around the world – almost exactly the same number as Spotify.

Big difference is, four times as many of Netflix’s customers pay a subscription each month: 60m of them, or 97% of its total consumer base.

READ THE FULL STORY AT MUSIC BUSINESS WORLDWIDE:
http://www.musicbusinessworldwide.com/has-music-missed-its-netflix-moment/

 


 

Why Spotify is not Netflix (But Maybe It Should Be)

 

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

 

BUT SPOTIFY IS PAYING 70% OF GROSS TO ARTISTS, ISN’T THAT FAIR? NO, AND HERE’S WHY…

David Pakman is Wrong on The Price Of Music (and streaming subscriptions)

Is there anyone left in the record business with common sense and a calculator?

David Pakman wrote an interesting piece asserting the problem with streaming services getting up to scale is a matter of pricing. He puts forth that $10 a month, or $120 per year is too much. He claims that the ability of these services to scale should be more in line with a monthly fee of $3-$4, or $36 – $48 a year to appeal to a broader base of the “average” music consumer. We think there are some serious flaws with this line of thinking not the least of which is that we can’t get the math to scale at $10 a month per user!

The first and most important error is that an “average” music consumer does not exist. Sure, you can average the total spending by the estimated number of consumers to find an average per consumer but no “average” consumer actually exists. Some spend many times the average, some spend far below it.

Pakman makes the assumption that music subscription services are over priced citing that the “average” consumer is only willing to spend $64 a year on music.  This completely ignores that the majority of highly active music consumers that have historically purchased much more than the average.

Those working in music distribution have always know that the most active consumers, contribute the greatest percentage of revenue to the total. In traditional terms this would be an expression of the classic 80/20 model where the top 20% of consumers represent 80% of the revenue. Conversely 80% of consumers only account for 20% of the revenue overall. This is of course an over simplification but it illustrates the point being made.

Here’s some simple math. Apple’s iTunes boasted 200 million users in 2011. Using Pakman’s own estimates at $64 per “average” consumer, the store should have generated a cool $12.8 billion in revenue. As we all know that’s not true, it quickly illustrates the problem with Parkman’s methodology of the “average music consumer.” Of course Itunes is not the only music retail outlet, and surely not all of those Itunes users were strictly music consumers. Again this is the problem with attempting to define an “average” music consumer to broader market economics.

Pakman also doesn’t fully account for the fact that while music prices dropped nearly in half from $19.98 compact discs to $9.99 downloads the volume of sales continued to decline. This is a decline that began with the introduction of Napster and has spread through the expansion of ubiquitous illegal file sharing networks such as the now defunct Kazaa, Grokster and Limewire.

The single greatest factor effecting both the price of music and the volume of sales, was and remains the illegally free supply of the exact same product available to consumers without risk, investment or consequence by those distributing it for profit without paying for the cost of goods.

But Pakman may have stumbled upon some other points of interest in his observation. First, is that the music business needs to learn how to window releases and build a transactional streaming model as the film business employs. We detailed this in our post “Spotify is not Netflix, but maybe it should be.” Second, there should tiered access on streaming services. A basic $4 a month subscription gets you the hits, say the top 200 current singles and the top 200 catalog albums. For $9 a month you get the hits plus all music more than a year old. For $20 a month you get everything available.

The narrow band thinking of music industry business people is stunning when we don’t need to look any farther than the film and tv industry to see a robust variety of different streaming products for different consumers needs and demands. The film and tv industry successfully window releases and have different pricing tiers based on access and there’s really no reason why these models would not, and can not translate to the record industry.

 

Lou Reed Exploited By American Express, AT&T, Chevrolet, Chili’s, Lysol, Pottery Barn, Vons, Domino’s Pizza, Netflix, Galaxy Nexus and Ron Jeremy!

Here we go again… We can go to Google and within minutes search for an artist of stature such as Lou Reed and quickly find unlicensed and infringing internet businesses exploiting his life’s work illegally while paying the him nothing, zero, zilch, nadda, zippo.

There are many disappointing things about all of this, but the first is that when doing a simple Google search for “Lou Reed Mp3” the first five returns are for illegally operating and infringing sites.

This doesn’t count YouTube which may or may not be infringing, and may or may not actually be paying Lou from the advertising revenue (on this video, in the screen shots below for example). This is all the more troubling because we know that this can be easily filtered if there is the will to do so.

The ad networks have been highlighted in the fantastic work done by Jonathan Taplin in the USC Annenberg Innovation Lab’s Advertising Transparency Reports.

Perhaps most disappointing however is that major companies like American Express, AT&T Chevorlet, Chili’s, Lysol, Pottery Barn, Vons, Domino’s Pizza, Netflix and Galaxy Nexus are still supporting the this exploitation of artists with corporate advertising dollars. These companies not only supply the funding for these sites exploiting artists to exist, but perhaps even worse they add legitimacy to music piracy by lending their brand identity to it.

Clearly there is a lot of money being made in the distribution of music on the internet. Sadly not much of that money (or in this case NONE of it) is being distributed (or uhm, “shared”) with the artists themselves.

In any value chain where the artists work is being distributed and/or exploited for profit, the artist should be included in that value chain.

LouReedGoogleSearch

LouReedAMEX

LouReedATT

LouReedCHEVY LouReedCHILI'S LouReedLYSOL

LouReedPOTTERYBARN

LouReedGalaxyNexus

LouReedDOMINOS

LouReedNETFLIX

Not only do we see the major companies supporting these sites but there’s also the scam ads, rip offs and bogus services. And here’s where it gets even uglier…on sites like The Pirate Bay the work of Lou Reed is promoting adult (escort services?) and porn products like the one offered by Ron Jeremy below.

LouReedTPBPORN

Let us not forget that the above examples represent a drop in the ocean of the over 200,000 infringing sites that Google alone is tracking.

See more Corporate Advertising Funded Exploitation of Artists:
Tom Waits * Neil Young * Aimee Mann * Neko Case * U2 * Ben Gibbard/Death Cab For Cutie * East Bay Ray / Dead Kennedy’s * Billy Corgan/Smashing Pumpkins