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04.05.12 MusicWeek 51


MUSIC STREAMING A


IS ABOUT MORE THAN SUBSCRIPTIONS VIEWPOINT ONLINE MUSIC


DIGITAL  BY CLIVE GARDINER


week never goes by without news/speculation/rumour and sometimes even actual data to fuel the debate around


streaming services such as Spotify, Pandora, Deezer, Rdo, MOG , WE7 and Grooveshark. Are they the music industry’s future, or its destroyer? Do they encourage discovery, or cannibalise sales? Should they be encouraged, or further restricted? My issue with all the noisy postulating and


positioning is that it’s often narrowly focused and Spotify-centric. The latter is no surprise as they are the global streaming leaders and pioneers and have achieved some brilliant things to date. A Spotify headline guarantees a read. But it is


not correct to assume that all digital users want an on-demand model, even when it’s free. At WE7 it took us two to three years to learn that our (mainstream) users wanted a guided ‘sit-back’ experience, and we evolved into interactive radio to better fit their needs. The more mainstream you go, the more help people need. If on-demand subscription services can attract


say 20% of available online users, that would be phenomenal. But what about the rest? What services are required to attract, engage and retain millions of new mainstream music fans into using licensed digital music? I mean those who have not yet touched digital


music streaming except YouTube and who sometimes want something more than standard radio. I mean those who will find an app like Spotify too challenging and want simple search,


“In the US, Pandora has shown how a


mass market, simple-to-use interactive radio service can build significant traction without


impacting growth of on-demand subscriptions and download sales”


click ‘n’ play that they can dip in and out of wherever they are online. I mean those who don’t want to manage a large digital music collection and who will never pay a music subscription. And I mean those who want to stream music on their phone but may have dodgy mobile reception or limited data tariffs. The ‘mass market’ is completely different from the music obsessives, trendsetters and early adopters who work in music, media and tech. There are 47 million people in the UK who


regularly engage with some sort of radio. Many millions might be persuaded to spend some of their listening time using an interactive radio service. Replacing a play of a song already acquired and on a device with a new play of a live or cached stream from an interactive radio service can generate significant additional royalties for labels and


publishers, with every play at the same collective license rate. This is the opportunity that exists now. The services and the technology are already here. Interactive radio can be developed without


impacting the growing revenues from digital purchases and streaming subscriptions. Industry working groups’ research has clearly shown that these are different consumer segments and satisfy different needs/benefits. So they need to be embraced and promoted with equal vigour. In the US, Pandora has shown how a mass


market, simple-to-use interactive radio service can build significant traction without impacting growth of on-demand subscriptions and download sales. Pandora has 125 million registered users - nearly half of which are active - and they have recently announced reaching 1 billion listening hours for the first time, representing more than 5% of total US radio listening. They have taken more than a decade to reach


their current scale, with mobile usage being the critical growth driver. Pandora is predominantly a free-to-use service funded by advertising, and uses a statutory collective license from SoundExchange for the recording rights. Pandora pulled out of the UK and say they will not re-enter because the rates here are too high. For five years I’ve driven music licensing strategy


at We7.com, a UK based digital music startup. We7 has always been targeted to and successful with the mass market. From scratch, we built a mainstream user base of up to 3 million monthly unique users attracted by our simple click ‘n’ play website and widgets, and our strong commitment to editorial. It is a unique audience, with Comscore saying only 2% of We7 users also use Spotify. In response to our users’ behaviour, We7 has focused more and more on interactive radio –


ABOVE


Open-minded: Clive Gardiner encourages the trade to bear in mind non-Spotify models such as those used by Pandora and We7 when discussing streaming


simply enter an artist or song or genre, and a playlist/station will be generated for you based upon one or a combination of relational databases. The user can’t see what songs are coming next,


so it’s a much simpler, ‘sit-back’ user experience than full on-demand, and one that will live or die by the quality of the results. From Pandora’s US success, it’s clearly a functionality that can engage large numbers of new people, some of whom may outgrow this layer and move onto more sophisticated on-demand services in the future. Building viable interactive radio services at the


same time as growing on-demand subscription services is a win-win for all. The mainstream music lover is fickle, spoilt for choice and able to access all the music they want somewhere online. To win them over will be very hard. To do so needs more than one song.


CLIVE GARDINER is a digital content expert and music industry executive who has just left We7 after f ive years. He is contactable on email at: clivegardiner@gmail.com


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