Is this the beginning of the end for free music streaming? Warner Music announced it will no longer allow it’s music to be streamed for free on services like Spotify and Last.fm.
They still have not confirmed whether or not they will pull their music from already existing services or just not open their catalogue to new services, either way it is a massive blow for consumers.
Their reason was because it does not bring in enough revenue; so wait, piracy does? The announcement will no doubt send shudders around the other majors and if they go to form, we will see free music streaming fall faster than a house of cards in a blizzard.
So here’s four reasons why Warner and Spotify (picking on them because they rule the roost in the UK), need to fix the f*** up!
1) You need to stop being lazy and get creative
Over the years the major labels have shown themselves to be slow and inflexible, trying to dictate to the Internet instead of adapting like every other business has done.
Personally I cannot understand why these super paid senior execs at major labels still act like it’s the 1980s and they’re trying to stop people taping from the radio. The lack of business innovations bemuses me and the people working there should be embarrassed.
You need to realise you must put some effort into things instead of being lazy and crying “copyright infringement this or royalty payments that.” New business models are the lifeblood of all industries, music is no exception.
Many of the key innovations have come from non-music related companies. Apple, a computer manufacturer, created the iPod. Were you not embarrassed by that? How do you think Toyota would feel if Coca-Cola had developed the Hybrid technology?!
2) The internet should not be scary, it can be tamed
The internet was a new beast back in 1995. It’s 2010 now and you’re still acting like it’s the late 90s and Alta Vista still rules the search engine world.
Every other industry under the sun has managed to adapt to the digital age and make it work for them. They listened to consumers, gave them what they wanted. It’s not rocket science, just takes a little hard work.
3) Spotify, open up you user base
After the launch of the iPhone app Spotify prevented new users signing up for free (without being invited), which effectively capped their user base. When you are trying to grow, this is the last thing you do. So infrastructure may have forced you to slow your growth however did you really need to slow it that much?
A greater user base means you can charge more for your advertising. Higher prices for advertising = increased revenue (some of which you can give to labels to stop them walking away!). By limiting your user you in essence forcing your revenues away. Brands struggle to determine ROI from new media like Spotify. Your USP is you captive audience which is a key demographic and contains many extremely hard to reach user groups!
4) Concentrate on the majority
Ninety-five percent of Spotify’s user base opts for the free model so you really need to start concentrating on maximising revenue from these guys as opposed to hoping everyone will magically decide to take up the premium model.
Smartphone penetration in the UK is still only 12% (and not even all smartphones can run Spotify!). Putting all your eggs in one basket is ludicrous and once again limits your potential. Stop being lazy.
Warner – Don’t give up on streaming just yet. Challenge your staff to be creative and give consumers what they want as opposed to forcing them to compromise or head down dark alleys to get what they desire.
Spotify – CALM THE FUCK DOWN!!! Concentrate on making Europe airtight before chasing the American dream. Fighting on two fronts with a weak base is business suicide. Yes there are potential threats in the US however you have the strongest model (who remembers SpiralFrog?). Early entry helps, however weak entry will kill you. Google categorically proved you do not have to be first into a market; you just have to do it right, be bold with your actions… oh and listen to our consumers
The next few months will be telling because if the other majors follow Warner out the door it will kill of streaming and we’ll be back to square one. Warner, Spotify… please don’t fuck it up for everybody!