By Jean-Robert Bisaillon
The Web is full of information on new music streaming services, also known as music webcasting or web streaming services. Numerous artists are standing up against these low-paying services (see http://www.digitalmusicnews.com/permalink/2013/12/02/artistspiracy), but little attention is being paid to the downstream result of these services: offline listening. What are the impacts of these types of services on the music industry value chain?
Variously called tethered download, limited download, stand-alone portable use or offline mode (and referred to by Francophone users as “écoute hors-connexion,” “forfaits mobiles” or, in the case of CSI Inc., “téléchargements limités”), what these services are offering users is the hugely attractive ability to buffer music onto their portable devices, and listen to their selections offline later on while riding the subway, driving their car or jogging.
In my opinion, this new way of using music is in line with the major transformations of physical supports. Streaming music listening has often been likened to broadcasting, with the notable difference that users can select the station’s content piece by piece, an ability that has the potential of disrupting broadcasting models. This being said, once we acquire the ability to cut ourselves off from the network and take off with our favourite music, what has really changed is our relationship with the physical support of music. Whereas a music CD used to cost $20 and a permanent album download was available for $9.99, subscriptions to these new models, for a monthly fee of $10 or $15, enable users to browse the supplier’s catalogue before leaving home and access virtually any album without being connected to the Internet. The permanent download model has lost its once special appeal.
Available offline listening services include Slacker Premium Radio, MOG Primo, Spotify Premium, Google Play Music Locker, Deezer Premium Plus, Rdio Unlimited/Illimité and Zik Mobile.
Caption: Table 1 shows a partial account statement sent by a world renowned aggregator to a client record company. The iTunes royalty for a permanent download, as we know, is approximately half a euro (0.50) or 50% of the consumer service price. The royalty paid by Deezer Premium Plus is approximately one-hundredth of a euro (0,009), which is 50 times less, and the royalty paid by Spotify Mobile is half that amount (0.005), which is 100 times less.
Table 1 shows that the royalties paid on behalf of offline listening are only marginally higher than those for online streaming, and are sometimes up to 100 times lower that what can be obtained from the iTunes model.
The question is, how many songs do consumer actually buffer and save each month on their mobile phones in return for the 10 euro subscription they are paying? Under current rates, consumers may store up to 2,000 tracks (the equivalent of some 150 albums) before the dollar value of a single iTunes permanent album download is matched. This is a sizable value for consumers, of course, but we may wonder whether consumers fully take advantage of that possibility. If such ceilings are not actually reached, then we can question the discount rates offered by offline streaming services. Moreover, the value is clearly moving towards the storage capacities of mobile devices.
At a time when software programs make it easy to determine the exact number of tracks being listened to and the actual amount of time each file remains buffered, why can’t users be billed for uses in excess of a given threshold – say 30 offline albums per month – and why are the royalties paid being reduced by virtually 100% for uses that amount roughly to a permanent iTunes album download? Mind you, these services are incurring such high operating costs looking after their all-you-can-consume buffets! Competition is brutal in the digitized music market – a non-rival commodity existing in an infinite number of copies. But the real issue is that the profitability of these services and of the makers of mobile devices is being squarely achieved on the backs of creators.
In the real world, no consumer needs an infinite amount of music – there are not enough hours in the day to stretch the music listening experience that far. People also need some time to digest. The future will make it necessary for us to revise the broken social contract between artists and their audience. In the meantime, new rules must be put in place to cancel the devastating effects that such prevalent toxic rates are having on the music ecosystem.