What is happening in the streaming audio market: discussing the development of streaming platforms
Last year, streaming services announced the main mode of music consumption in the West. As the user base of the platform grows, they try to cut costs, get rid of the “curse of unprofitability” and try to find new opportunities for earnings.
We tell what and who has already managed to do in this regard.
Photo Tobias Scheck / CC BY
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One of the most common reasons for criticizing streaming services is small payments to musicians and composers. To earn something significant, the author must collect 200 thousand auditions on Apple Music or 366 thousand on Spotify. The task is not easy. Famous musicians also express discontent with the situation, which makes it possible to speak of the inevitable revision of the approaches to work with the authors.
The first step towards making Spotify. The company immediately decided to go ahead and offered to enter into direct deals around the labels. Such a model will allow Spotify to pay fixed fees at the start of exclusive cooperation with musicians and save subsequent deductions for streaming their works. SoundCloud offered a similar model: the company will not pay the starting fee, but it will allow authors to earn from advertising blogs (similar to the YouTube model).
New initiatives are developing not only companies, but also governments. The most famous American Music Modernization Act. The law prescribes the creation in 2020 of a new regulator, which will negotiate with the streaming platforms about the amount of payments to musicians. A similar situation occurs in Europe, where a new copyright directive is adopted: online platforms are required to implement “filters” that will remove all unlicensed content when they are downloaded.
Politicians believe that the Directive will help increase the size of licensing fees for authors and composers. However, according to representatives of the music industry, the law will harm young performers who begin their careers with creating cover versions. With the adoption of the law, the use of other people's works for such purposes will be unacceptable.
Another bill created in Canada. The local organization for the protection of the rights of composers proposed to introduce an additional tax on the use of streaming services - and it was decided to collect it from everyone who spends more than 15 GB of Internet traffic per month. The initiative was strongly condemned: under the law, even those who do not use streaming platforms, such as gamers, would have to pay.
Despite the fact that the annual revenue of large streaming services exceeds a billion dollars, they still incur losses due to high royalties. Organizations have to look for new ways to make money. For example, in the spring of 2018, Spotify decided to place shares on the stock exchange. After the transition to public status, the value of the company's securities grew steadily - but this did not help Spotify to become profitable.
Due to the lack of profit, the streaming platforms have to change the ways of monetization. For example, SoundCloud abandoned the traditional subscription model after it was on the verge of bankruptcy. Now she focuses on the sale of services for musicians and advertising revenue.
Another new way to monetize is podcasts. The production of spoken audio content requires small budgets, and the advertising market in podcasts is growing. Large streaming services - Spotify, Pandora and Yandex.Music - are already working with podcasters and are planning to develop this area.
Photo Tobias Scheck / CC BY-SA
Difficulties with monetization do not stop the development of streaming platforms. At the end of 2018, Tencent Music (TME), which owns the largest music streaming applications in China, entered the international market. She placed shares on the New York Stock Exchange.
The most interesting was not the actual IPO of the company, but its unusual for the West business model. TME earns not on subscriptions, but on the social aspects of applications, such as virtual gifts. Probably, the placement of Tencent Music shares on the stock exchange will become for other streaming platforms a reason to think about entering such functionality.
Winamp has also announced that it has entered the audio streaming market. In 2019, it is planned to release a completely new version of the player - it will be turned into a single aggregator for other streaming services with music and podcasts. It is not yet clear whether this idea will be crowned with success - other platforms may simply refuse to cooperate with a competitor.
Russia has developed its own market of streaming services. Of the large international platforms, only Apple Music and Google Play have gained popularity. We should not forget about Spotify, which at the end of 2018 once again promised to launch its platform in the Russian market. But until that happens, the widespread use of the service can only be discussed in relation to the IT community and people working in the media.
Other projects we have known are Yandex.Music, Boom, Zvooq - home projects. They found their listener. As in the rest of the world, the number of their subscribers is growing: over a million people are already paying for using Yandex.Music and Boom. It remains only to observe the development of domestic streaming companies and how the introduction of new opportunities for subscribers will affect the growth of the user base of services.
What we write about in our "World Hi-Fi":
Talk Hi-Fi trends: the sound show transcript
What is it: the Russian market of streaming services
Eight audio technologies that will fall into the hall of fame TECnology in 2019
How to turn a computer into a radio, and other ways to extract music from the calculus. systems
We tell what and who has already managed to do in this regard.
Photo Tobias Scheck / CC BY
')
Platforms are getting closer to the musicians.
One of the most common reasons for criticizing streaming services is small payments to musicians and composers. To earn something significant, the author must collect 200 thousand auditions on Apple Music or 366 thousand on Spotify. The task is not easy. Famous musicians also express discontent with the situation, which makes it possible to speak of the inevitable revision of the approaches to work with the authors.
The first step towards making Spotify. The company immediately decided to go ahead and offered to enter into direct deals around the labels. Such a model will allow Spotify to pay fixed fees at the start of exclusive cooperation with musicians and save subsequent deductions for streaming their works. SoundCloud offered a similar model: the company will not pay the starting fee, but it will allow authors to earn from advertising blogs (similar to the YouTube model).
New initiatives are developing not only companies, but also governments. The most famous American Music Modernization Act. The law prescribes the creation in 2020 of a new regulator, which will negotiate with the streaming platforms about the amount of payments to musicians. A similar situation occurs in Europe, where a new copyright directive is adopted: online platforms are required to implement “filters” that will remove all unlicensed content when they are downloaded.
Politicians believe that the Directive will help increase the size of licensing fees for authors and composers. However, according to representatives of the music industry, the law will harm young performers who begin their careers with creating cover versions. With the adoption of the law, the use of other people's works for such purposes will be unacceptable.
Another bill created in Canada. The local organization for the protection of the rights of composers proposed to introduce an additional tax on the use of streaming services - and it was decided to collect it from everyone who spends more than 15 GB of Internet traffic per month. The initiative was strongly condemned: under the law, even those who do not use streaming platforms, such as gamers, would have to pay.
Streaming wants to "get a plus"
Despite the fact that the annual revenue of large streaming services exceeds a billion dollars, they still incur losses due to high royalties. Organizations have to look for new ways to make money. For example, in the spring of 2018, Spotify decided to place shares on the stock exchange. After the transition to public status, the value of the company's securities grew steadily - but this did not help Spotify to become profitable.
Only at the end of 2018, the streaming platform finally announced the first ever profit. However, it turned out that the main reason was cost reduction. The company has not found a fundamentally new income model and is losing money, like other services, such as Apple Music.
Due to the lack of profit, the streaming platforms have to change the ways of monetization. For example, SoundCloud abandoned the traditional subscription model after it was on the verge of bankruptcy. Now she focuses on the sale of services for musicians and advertising revenue.
Another new way to monetize is podcasts. The production of spoken audio content requires small budgets, and the advertising market in podcasts is growing. Large streaming services - Spotify, Pandora and Yandex.Music - are already working with podcasters and are planning to develop this area.
Photo Tobias Scheck / CC BY-SA
New giants appear
Difficulties with monetization do not stop the development of streaming platforms. At the end of 2018, Tencent Music (TME), which owns the largest music streaming applications in China, entered the international market. She placed shares on the New York Stock Exchange.
The most interesting was not the actual IPO of the company, but its unusual for the West business model. TME earns not on subscriptions, but on the social aspects of applications, such as virtual gifts. Probably, the placement of Tencent Music shares on the stock exchange will become for other streaming platforms a reason to think about entering such functionality.
Winamp has also announced that it has entered the audio streaming market. In 2019, it is planned to release a completely new version of the player - it will be turned into a single aggregator for other streaming services with music and podcasts. It is not yet clear whether this idea will be crowned with success - other platforms may simply refuse to cooperate with a competitor.
What do we have
Russia has developed its own market of streaming services. Of the large international platforms, only Apple Music and Google Play have gained popularity. We should not forget about Spotify, which at the end of 2018 once again promised to launch its platform in the Russian market. But until that happens, the widespread use of the service can only be discussed in relation to the IT community and people working in the media.
Other projects we have known are Yandex.Music, Boom, Zvooq - home projects. They found their listener. As in the rest of the world, the number of their subscribers is growing: over a million people are already paying for using Yandex.Music and Boom. It remains only to observe the development of domestic streaming companies and how the introduction of new opportunities for subscribers will affect the growth of the user base of services.
What we write about in our "World Hi-Fi":
Talk Hi-Fi trends: the sound show transcript What is it: the Russian market of streaming services Eight audio technologies that will fall into the hall of fame TECnology in 2019 How to turn a computer into a radio, and other ways to extract music from the calculus. systemsSource: https://habr.com/ru/post/441826/
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