Why streaming sucks

spotifyAs soon as digital copying became inevitable the record industry decided they could lock-up music delivery. Their first effort, the in-house SDMI consortium, failed. Subsequent attempts to use third party DRM also failed. CD copy-protection was a disaster and after a few years Amazon, then Apple, dropped DRM on downloads.

Streaming is the current plan for locking up music and breaking the retail power of Amazon and Apple, although it is not new. The customer never owns streamed music unless they pay again, and when their subscription ends no music has changed hands. This is called “access” rather “ownership”. The first comprehensive Major label streaming service, Listen, launched in 2002, it is now called Rhapsody and has about a million subscribers.

I have always been sceptical about streaming as a mass market substitute for music sales although many access evangelists would disagree. UMG expects streaming services to have 2 billion subscribers one day but after a decade there are just about 10 million, worldwide. Here are the main reasons why I think streaming has to change beyond recognition to succeed.

Premium pricing

Streaming subscriptions are priced as a premium product. That is, they are priced at twice what the average music buyer spends. And yet streaming doesn’t have a premium feature set: it is audio-only, it is not 100% reliable, its music repertoire and added-ons (e.g. band biographies, ticketing, lyric sheets, artwork, merchandise, etc.) are limited, new music is often delayed, and each service requires its own subscription. If you change services you lose everything, nothing is portable—you can’t share a subscription.

The record industry also hopes streaming will facilitate “music discovery”. A reliable music discovery service would be a premium product, if it worked.

The final drawback is that this premium product returns the smallest reward to its artists. This matters because music fans care about their favourite artists in a unique way. The most popular social media figures are not politicians, record company bosses, games designers or even media celebrities, they are music acts. Fans want to see artists rewarded fairly and artists want to get the market data they need from middlemen.

Either the price must drop—probably to $2.50 a month or less—or the product must change.

Audio v. YouTube and the rest

There are some audio-only situations: driving, jogging and background listening for example. Streaming—given suitable playlists—is a suitable product but it faces competition from radio, which does the same thing free.

Audio is only one aspect of today’s multi-media world. Artists play live, make records, make video, sell merch, blog and tweet. Any audio-only product is severely limited, especially when YouTube and other resources are just a click away. Why would any buyer blow their entire music budget on access to audio-only in 2013?

Streaming music repertoire

Daniel Ek likes to say Spotify has everything, everywhere but it doesn’t. There are still some big name holdouts but even without them there’s a lot of music missing. All the online music services offer about 25 million tracks out of the 100s of millions that have been recorded.

Streaming might be OK as a mass market product with just the chart music from the past 50 years, but it doesn’t even have that. And even if it did, chart music radio has that niche covered.

(Last year I tried the Apple Cloud music product. The repertoire record companies and digital aggregators make available to Apple, Amazon, Spotify and others is very similar. About 25% of my 11,000 track library was not matched by Apple.)

Streaming music reliability

Streaming music services depend on mobile carrier up-time and coverage, Internet availability, server up-time and device up-time.

I have seen many streaming evangelists claim they don’t keep any other music but we all experience Internet and mobile network down-time. Anyone who has a streaming subscription will have service interruptions. The evangelists can obviously live without their music because they will have to from time to time.

I have iPods, computers, CDs and mobile phones. I always have something that will play my music and I even have several copies of my digital library. It seems likely other music buyers in the premium market will have similar resources these days.

Music discovery

Many people have tried to crack music discovery: Peter Gabriel’s The Filter, Amazon’s collaborative filtering (“people who bought X also bought…”) and so on.

But music discovery is something we do, not something done for us. Here’s some of the places I discovered new music I like recently: cinema trailers, radio, YouTube, email from friends, Twitter, music media reviews, DVDs and TV. These sources help me discover music and lend context to it but they don’t do the discovery.

In short, anywhere music happens or gets discussed is a place where it might be discovered but streaming services are never going to offer this as a premium feature because nobody can.

Streaming sucks

OK, 10 million people pay for it and 20 million others like it enough to endure the adverts. Record companies get extra income and probably see it as a win but it’s not exactly taking off. Recently one of my favourite music biz economists, Will Page, moved from PRS to Spotify, and another, Ian Rogers, moved to Beats. They know what’s what and can point the way forward. But serious disruption is necessary if streaming is ever going to not suck.