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$9.99-a-month streaming not at saturation point say major labels


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The music industry added 27 million net new streaming subscribers in 2015, according to this week’s IFPI figures, taking the global total from 41 million to 68 million people paying for services like Spotify and Apple Music.

Yet in some quarters, there is concern that the dominant $9.99-a-month model will run out of steam in the near-to-mid future, forcing the industry to sanction more lower-priced subscription models. However, major labels do not yet see a saturation danger in the current pricing strategy.

Michael Nash, EVP of digital strategy at Universal Music Group, told Music Ally this week that he is confident there is more growth to come. “We are at the early stage of adoption for subscription,” he said.

“It’s being driven by fundamental technological change and we are going to be in a world pretty soon of 5bn smartphones. We don’t think there are going to be 5bn $9.99-a-month subscribers, but we think there are going to be hundreds of millions of $9.99 subscribers and then people consuming content backed by a bunch of different models.”

Nash was backed up by Warner Music’s CEO of international and global commercial services Stu Bergen. “I think it’s quite sustainable as it’s an incredible value proposition to have the world’s music at your fingertips for a modest price a month,” said Bergen.

“Awareness is the biggest challenge – more than price point. If you look at Sweden and Norway, you have fairly high penetration rate [of subscribers]. We are a long way from there in the US and the UK, for example. We are always open to experimentation and calibrating services and pricing, but I don’t think we have reached the saturation point – or anywhere near it – as far as the existing services in the market.”

Major labels

Nash, Bergen and Berger at the IFPI’s press conference. Photo: Stuart Dredge / Music Ally

Even so, Nash added that new models around subscriptions will be part of the anticipated growth to hundreds of millions of people paying for streaming.

“When we go from tens of millions to hundreds of millions of paying subscribers, you are going to see a variety of different models. Maybe we will see models evolve around premium radio – that is being discussed a lot. Maybe different models that are more device-centric. I think you are going to see the market evolve,” he said.

“Do we need to have diversity in our approach to the consumers and to put different offers in place in the market? Absolutely. We will continue to want to experiment to support new models.”

The full interviews with Nash, Bergen and their equivalent at Sony Music Edgar Berger can be read in this week’s Music Ally Report, which goes out to our subscribers. For a free trial, click here.

Stuart Dredge

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