In his end-of-2014 memo to staff, Universal Music boss Lucian Grainge set out his ambitions for the company to be “a formative player in shaping and developing the music platforms of tomorrow”, including an intent “to design and, where necessary, re-design business models” in the digital music world.
It’s no secret that free, on-demand streaming is firmly in Grainge’s crosshairs at the moment, but what hasn’t been written about much yet is Apple’s role in the company’s change of heart.
Recode – which had Grainge on-stage at its recent Code/Media conference – has been digging: “Apple executives have been telling the music industry it can help them roll back the tide of free digital music by relaunching its own subscription streaming service this year,” its latest report claims.
“Apple executives, led by media head Eddy Cue and Beats Music founder Jimmy Iovine, have been arguing that the music business ‘needs to get behind a paywall,’ say people who have talked to them.”
Add in Billboard’s latest UMG source on freemium to this – “There are no regrets about initially supporting that business model, but it’s time to figure out how to drive up the value of our content” – and you see the makings of the current UMG/Apple alliance that fascinatingly sees the label picking the side in the upcoming streaming battle that it *doesn’t* have a significant equity stake in.
Or, at least, showing a willingness to force Spotify towards a premium-only business model on terms defined by a rival that has a device install base in the hundreds of millions to try to make that model work.
This, at a time when Spotify is preparing for its next round of licensing renewals, and when YouTube is on the verge of making its next move with its Music Key service, which is just as committed to freemium as Spotify.
But also at a time when freemium has become such a key driver not just in Spotify’s Scandinavian homeland, but also in markets demolished by piracy such as Spain. Universal knows this, of course: its international reach should be a buffer against a swingeing global “re-design” of streaming models based on advice from Apple and the latest army of US consultants to descend on the world’s most powerful label group.
It’s a mark of how jittery the music industry is currently feeling about the streaming transition that people – within Universal just as much as outside it – are fretting about what the change of heart over freemium at the top will mean on the ground in the coming months.
The desire to see many more people paying to stream music unites them all, but 2015 is a key fork in the road towards that goal – with more dangers ahead if that pathfinding goes awry.