Apple Reportedly Offering Half of Pandora's Royalty Rate for Streaming Music Service

[TallManNY]

Who is surprised that rich company wants to make more money by ripping off someone?

I doubt that major labels will make deal with apple as it would eat their profits. In Europe Spotify is 500% more popular than iTunes. I don't know one person who still buys anything from iTunes as you get the same content from Spotify.

Spotify should get grammy for saving music business.

Spotify is destroying the music business. You said it yourself, it is giving away the product and yet getting only the most modest of revenues from the customers. It is turning former paying customers into folks who expect to get it for free.

 

[bflowers]

I wouldn't pay any royalty rates if you forced me to listen to Justin Bighead. You would have to pay me a large amount of money to do that. Enough to cover all the therapy I would need afterwards.

 

[jctevere]

No what they are banking on is this explanation. Pandora is going out of business based on the prices for content you are charging them. So don't compare our offer to theirs, because theirs is a temporary illusion. Now Pandora and Spotify have special places in the marketplace with investor capital can be used to fund the companies at a loss, potentially for a few more years. But eventually that ends. Apple is suggesting that this is price point where a real company can come in and resell the content and make money.

However, this is a crushingly low amount of revenue for the content. Only a fraction of this would ever make it back to the artist creating the song. Even if you had a hit that got played, for example, 100,000 times in a year. The artist would probably do better setting up shop in the subway with a hat on the floor for a week.

So basically it is unclear that streaming even works as a business model.

I agree with your first paragraph, but I think you take too much of an extreme view in your second point. Firstly, a hit is not played only 100,000 times a year. It is played in the millionsand possible even billions. Have you ever listened to a hit only once? I didn't think so, otherwise it wouldn't be a hit. You would have millions of apple users using this service - so lets not get out of hand here.

Not to mention, that this would not replace iTunes, it is a supplemental service. So, artists will be making as much as they do now through iTunes sales - plus extra from streaming. And besides, most artists make all their money from concerts anyway...

 

[TallManNY]

I agree with your first paragraph, but I think you take too much of an extreme view in your second point. Firstly, a hit is not played only 100,000 times a year. It is played in the millionsand possible even billions. Have you ever listened to a hit only once? I didn't think so, otherwise it wouldn't be a hit. You would have millions of apple users using this service - so lets not get out of hand here.

Not to mention, that this would not replace iTunes, it is a supplemental service. So, artists will be making as much as they do now through iTunes sales - plus extra from streaming. And besides, most artists make all their money from concerts anyway...

I doubt it. When you want to listen to music, if you turn to Pandora, that is one less time you dive into your iTunes collection. Every time you don't dive into your collection, means you are one less step closer to thinking, "Gee, I've heard all this stuff, I think I will buy something new."

This doesn't seem to provide any artists with anything that comes close to being a meaningful bit of revenue. Maybe the most popular singers in the world, like Adel, might get a check that is big enough to be a game changer. Except for those singers their other revenues are so large that even the fairly big checks they get from Pandora are probably dwarfed by just a few concerts.

 

[roxxette]

I chose it carefully.

Get a grip mate

 

[Gym Hellwig]

Spotify is destroying the music business. You said it yourself, it is giving away the product and yet getting only the most modest of revenues from the customers. It is turning former paying customers into folks who expect to get it for free.

This has to be a joke. Piracy killed the music business. Spotify and other streaming services are bringing it back to life.

 

[TallManNY]

This has to be a joke. Piracy killed the music business. Spotify and other streaming services are bringing it back to life.

Piracy challenged the music industry. iTunes diminished piracy or at least stopped its growth. Spotify and Pandora are only helping the music industry if they are paying real money to the music industry. Currently their payments to the music industry are both small and not sustainable with the revenue they are collecting from their customers. While they are teaching consumers that a great customized collection of perpetually updated music should be available at all times for free or nearly free.

 

[Gym Hellwig]

Piracy challenged the music industry. iTunes diminished piracy or at least stopped its growth. Spotify and Pandora are only helping the music industry if they are paying real money to the music industry. Currently their payments to the music industry are both small and not sustainable with the revenue they are collecting from their customers. While they are teaching consumers that a great customized collection of perpetually updated music should be available at all times for free or nearly free.

You couldn't be more off base. iTunes had barely any visible effect on piracy (which reportedly peaked in 2005 and remained sky-high until the last few years). Remember that itunes started in 2001. The steep decline in piracy is the direct result of streaming sites (spotify, deezer, etc.) and beefed-up copyright enforcement. These sites began to spring up in 2006, the same year piracy declined for the first time (coincidence?).

http://www.rawstory.com/rs/2013/02/27/music-piracy-continuing-to-decline-report/

These services are turning millions of people who used to pay nothing into people willing to pay anywhere from $5 to $10 per month (which is waaay more than the average person has ever spent on music, traditionally). The ad-supported versions are meant to draw people in and are not sustainable. The paid subscriptions services will be an absolute goldmine in 5 years.

Sorry, but itunes and services like it are a dying breed. The future is here and the future is streaming.

 

[dotme]

...they are teaching consumers that a great customized collection of perpetually updated music should be available at all times for free or nearly free.

How is this any different than FM radio? I don't think Pandora is teaching consumers that listening to music should be free. Over-the-air radio taught people that, years ago.

The main issue in the USA is that royalty rates aren't equal on all platforms. The rate is determined in large part by the medium of delivery. AM/FM pays one rate, Cable/Satellite pays another rate, and Internet Radio pays yet another (And the highest by far).

http://finance.yahoo.com/news/internet-radio-fairness-act-level-122000530.html

I run an internet radio station. The royalties are unbelievably high.

 

[TallManNY]

You couldn't be more off base. iTunes had barely any visible effect on piracy (which reportedly peaked in 2005 and remained sky-high until the last few years). Remember that itunes started in 2001. The steep decline in piracy is the direct result of streaming sites (spotify, deezer, etc.) and beefed-up copyright enforcement. These sites began to spring up in 2006, the same year piracy declined for the first time (coincidence?).

http://www.rawstory.com/rs/2013/02/27/music-piracy-continuing-to-decline-report/

These services are turning millions of people who used to pay nothing into people willing to pay anywhere from $5 to $10 per month (which is waaay more than the average person has ever spent on music, traditionally). The ad-supported versions are meant to draw people in and are not sustainable. The paid subscriptions services will be an absolute goldmine in 5 years.

Sorry, but itunes and services like it are a dying breed. The future is here and the future is streaming.

Well I think it was iTunes becoming more popular that slowed piracy, not the launch of some streaming services that didn't at the time of piracy declining have that many customers.

If they convert folks into paying customers, then it will get there. But I think that is a big if. And I also don't think $5 per month is going to get it done either.

But yes as long as Spotify and Pandora is free and excellent (which they are) then things like iTunes is in trouble. I certainly am using both of those services (for free) at work much more often than plugging in my iOS. And the result is (I think) that I'm buying less music.

----------

How is this any different than FM radio? I don't think Pandora is teaching consumers that listening to music should be free. Over-the-air radio taught people that, years ago.

The main issue in the USA is that royalty rates aren't equal on all platforms. The rate is determined in large part by the medium of delivery. AM/FM pays one rate, Cable/Satellite pays another rate, and Internet Radio pays yet another (And the highest by far).

http://finance.yahoo.com/news/internet-radio-fairness-act-level-122000530.html

I run an internet radio station. The royalties are unbelievably high.

Vastly different. With Radio I have to pick between a limited number of stations, probably only three or four of whom play the songs I want. So I have limited choice and each radio station has fairly huge customers. Then I listen to whatever the radio plays, plus a commercial or two every 20 minutes or so. If I want to catch a specific song, unless that song is the most popular one of the day and I'm willing to listen for an hour or so, I basically have no chance.

With streaming cites I'm much closer to controlling the songs. If I want to listen to Adel, I type in Adel and I get a song. Heck, I type the name of the song I get that song. Then I get another song carefully chosen for me. Or I can type again and get the specific song I want. Plus I can skips songs. It is almost as big a difference as between watching the major networks OTA and getting video on demand.

Yep, internet radio pays the highest royalty rate. But you are also a much closer service to what I would get if as a customer I went and bought the actual album. But what you pay doesn't approach the revenue of the album sales. No wonder you are considered a threat to the industry.

My suggestion to streaming services is to stop giving away your product. Either run more adds to create revenue or put it behind a pay wall. But since that won't work because anyone who does will lose customers to the services that don't do this, then I see the whole industry as kind of doomed. And I think it will do a lot of damage in the process.

 

[Rantipole]

Why doesn't someone tell Bieber that hairstyle looked stupid even when Vanilla Ice was rockin' it the first time?