The modern music business is suffering from a crisis of uniformity — and it’s absolutely fine with it. Scan across streaming services like Spotify, Apple Music, Amazon Music Unlimited, Pandora, and YouTube Music, and you’ll find almost exactly the same 50 million songs, presented via similar playlists, similar user interfaces, and similar in-app tool sets. The three major record companies, harborers of colossal market power, like it this way: They are now jointly generating close to $1 million every hour from streaming platforms.
Yet in any industry where innovation is frustrated, resulting in a homogenous product mix, two things are guaranteed: (1) Surviving services will pinch ideas from one another, rendering the leading players ever more indistinguishable; and (2) A low price threshold will eventually become the defining factor in the marketplace.
Point 1 has become very apparent in the past few weeks. YouTube Music just launched Discover Mix, a playlist so similar to Spotify’s Discover Weekly that it arrives in the same time scale (weekly) and borrows half its name. Over on Apple Music, the recently unveiled New Music Daily playlist essentially offers the same function as Spotify’s long-established New Music Friday — yet every 24 hours, rather than every seven days.
One reason these platforms struggle to differentiate themselves revolves around a failed experiment. Apple Music pursued a strategy of timed exclusives after it launched in 2015, securing its subscribers “windowed” early access to new records from the likes of Gwen Stefani, Drake, Frank Ocean, Katy Perry, Future, and the 1975. Yet this strategy was eventually scrapped — partly under pressure from record companies that grew to see it as a threat, and partly because artists were, it appeared, being overtly punished by Apple’s rivals for their disloyalty. (In a portentous example, Perry released her flagship Olympics-themed empowerment anthem, “Rise,” as a two-week Apple Music exclusive in summer 2016; it was subsequently blackballed on Spotify’s key playlists, which significantly hurt its performance on charts worldwide.)
So here we are today, with five or six major players in the music subscription streaming space driving digital-industry revenues to record highs, but, experience-wise, largely failing to mark themselves out from the crowd.
Over in the TV world, things couldn’t be more different. Having watched Netflix’s mushrooming global domination, the likes of Disney, HBO, Amazon, and Apple are all now really taking the fight to the market leader. One of their key weapons in doing so contrasts sharply with music’s global model, but might hint at a lucrative future opportunity for the major record companies.
In the past month, Netflix has splashed out $500 million for the exclusive worldwide rights to all 180 episodes of Seinfeld, from 2021 onward — having just lost the rights to Friends in a $425 million coup by HBO Max and its parent, Warner Media. A day after the Seinfeld deal, we learned that HBO Max had also nabbed exclusivity to The Big Bang Theory’s 300 episodes for a cool $1 billion. The touch-paper for these video “streaming wars” was lit by newcomer Comcast, which paid $500 million in July to box off The Office (again, from 2021) for its new Netflix rival, Peacock.
The record business and its digital platforms have comprehensively given up on the idea of new-artist exclusives. But an equivalent discussion around historic evergreen catalogs, and how they could help music streaming services more effectively define themselves, could become a viable possibility. For Seinfeld, read the Beatles; for Friends, read Queen; for The Big Bang Theory, read Michael Jackson (should his popularity survive its modern-day scandal).
Those in the industry to whom I’ve posited this idea in the past few years dismiss it readily. Their argument: By giving everything away to Spotify et al., the record industry finally delivered consumers an experience that was better than piracy. And it’s certainly true that, since Spotify arrived in the U.S., in 2011, annual global recorded-music revenues have grown 27 percent — from $15.0 billion at the time to $19.1 billion last year.
Yet the idea that making all artist catalogs available on streaming has killed piracy is flawed. Witness last year’s Music Consumer Insight report by global recorded music trade body IFPI, which found, via an extensive survey, that more than a third (38 percent) of music consumers, worldwide, were still accessing tracks via copyright-infringing platforms — 10 years after Spotify first launched in Europe.
An update to that IFPI report, released earlier this week, shows this copyright-infringing number has now fallen to 27 percent, although it sticks at 38 percent among the 16-24-year-old age range. “The availability of music through unlicensed methods, or copyright infringement, remains a real threat to the music ecosystem,” acknowledges IFPI CEO Frances Moore.
Another argument against Big Bang Theory-style selective licensing in music is that “old” artists don’t stream like new artists. Again, there is evidence here: According to MBW analysis of Alpha Data numbers, less than half (45.9 percent) of all on-demand audio streams in the U.S. last year were of “deep catalog” — i.e., music that was originally released three or more years before it was played. That number has slightly declined in recent years, too, suggesting that “old music” has lost some of its commercial luster. (Spot check: The Beatles are currently Spotify’s 96th-most-popular artist, with 20.3 million monthly listeners; Queen, at number 29, have 31.8 million; the platform’s number one act, Ed Sheeran, has 67.3 million.)
And yet the new IFPI report (“Music Listening in 2019”) shines an important light on the potential that lies ahead among an older demographic for the likes of Spotify (which, to date, has almost exclusively targeted itself at millennials). The report notes that “the highest rate of growth for use of streaming services [globally] is in the 35-64 age group,” with 54 percent of this societal segment having used a music streaming service in the prior month, up eight percent versus 2018.
If the music industry is ever to follow TV’s lead with billion-dollar “streaming war” catalog paydays, it may first have to take a baby step away from the idea that all records ever released have the same intrinsic value. Right now, all music licensed to Spotify etc., by any large catalog holder falls under one simple giant revenue-share agreement. Yet insiders at the major companies have told me on more than one occasion that a two-tiered price split — with, say, the top 500 most-played records of all time warranting a higher revenue share than the millions of other tracks on a platform — could well become a future consideration. (I hear that such thinking isn’t on the agenda during Warner and Universal’s current negotiations with Spotify for a new multiyear global deal.)
The major record companies will be watching the current TV “streaming wars” closely. Their conclusion will show whether a catalog-exclusives strategy frustrates consumers to the point that they stop spending — or, in fact, succeeds in delivering even sweeter paydays to the biggest rights-holders of the streaming age. If the latter bears out, expect the record companies to determine which of their historical artists carry the most devoted, seismic audiences — and then to think carefully about auctioning off their rights to the highest bidder.
Tim Ingham is the founder and publisher of Music Business Worldwide, which has serviced the global industry with news, analysis and jobs since 2015. He writes a weekly column for “Rolling Stone.”