Last week, news leaked that Jay-Z’s Project Panther was in the process of purchasing streaming service Aspiro.
While I don’t believe that most users care about (or could discern the quality of) high fidelity audio, a major artist choosing a single platform to focus on could have an interesting impact to the overall market (specifically Spotify and Soundcloud)
First, some assumptions:
1. One platform will eventually dominate the subscription streaming market
2. Artists have been trained to be skeptical of new technology platforms
3. Most music consumption is focused within a relatively small number of stars (<50 artists)
To start, leveraging the trust of being run by someone within the music industry, the company needs to go out and work on getting access to the full catalogs of the top ~20 music stars. With less paid in capital, the company has a bit more flexibility to grant equity and should do so liberally in exchange for long term relationships with those individuals (and their related organizations)
(There’s a myriad of legal reasons this type of plan would fall apart, but for now lets assume the business was able to appropriately deal with these issues on a long-term basis)
With the top artists on the platform, the value proposition for the majority of consumers is far easier to understand as it starts to really look like a comprehensive solution for music listening. Rather than asking a user to pay $9.99 a month plus the money they spend to buy the handful of CDs they really want each year, music listening does really become one flat fee per year. With the deep catalog, the company builds a free radio product and cuts deals with each of the car companies to be a built-in option on all new cars.
(I’ll even admit to purchasing the new Taylor Swift album on iTunes and uploading to my Spotify to have it on the go. Its awesome fwiw)
The long tail of artists is driven (mostly) by distribution. Very few artists have seen significant income from Spotify or others and their play volume won’t ever be able to significantly change their business. However, they do care about gaining exposure to a broader audience that they can bring down the funnel from aware to listener to fan (where further down the funnel they’re able to monetize via merchandise and live touring) If a service has significant users, artists will join in – and if you can show that you can convert listeners into paying fans – the bands will even engage with the product consistently (MySpace and Bandcamp are great examples)
The result is a positive feedback loop where more content leads to more users leads to more revenue leads to more content starting the loop again. The major artists see gains in their equity stake (as well as monthly revenue share) and the small artists gain a large audience to interact with (especially if the company builds artist tools similar to Bandpage into the product.)
(As an aside, the other low hanging fruit in the music space is social – which MySpace was very good at and both Spotify and Soundcloud missed)
The losers in this process are the surprising number of “scammy” cover and bad music makers who make a surprising amount of money on Spotify filling in the catalog gaps and making highly searchable music. Check out some examples of awful covers of my favorite Taylor Swift Song below. Or this guy who makes tens of thousands a month creating birthday songs on Spotify.
(I wonder if Spotify shares this information with artists – “This is how many people searched for your song and this is how much artists covering your song made on it on our service)
For whats its worth, I don’t think this is the plan for Aspiro – but its an interesting exercise to think through. In Music – like most creative industries – the creator remains king and the platform that best serves their needs will end up gaining the largest adoption of loyal artists and and be the long-term winner in the space.