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The end of free music streaming is coming

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Couple listenning to music on a streaming service. 2017 - Credits : Antonio Guillem / 123RF

The majors push hard the streaming platforms – from which they derive a large part of their incomes – to develop premium offers and paid subscriptions.

Universal and Spotify have just signed a new agreement deploying a 2-weeks delay of waiting for the free accounts users who want to listen to the next albums of worldwide renowned artists such as Adele or Lady Gaga in relation to the premium accounts which can benefit immediately after the exit. After months of discussion, Universal Records accepts a reduction of its remuneration on each song, in return for an exclusivity of the last albums of its stars for the paying subscribers. The compensation will be degressive, as the platform gains more subscribers.

Universal is trying to kill any interest in subscribing to a free offer on Spotify and other streaming service. This spirit comes straight from Silicon Valley, which believes that the conquest of a user base as wide as possible is more important than its profitability. This libertarian spirit, which built the planetary success of internet, has also destroyed entire industries, beginning with that of music. In less than 20 years, the music industry’s turnover and its number of employees have been halved.

From 6 majors to 3 in a few years

Threatened with extinction due to the explosion of piracy, the majors have tirelessly persecuted the illegal downloaders on the Web and restructured the profession with the ax. From six major world houses in 1998, there are only three. A retreat masked by the parallel development of the great live events, which enriched only the greatest stars of the sector.

In 2016, and for the first time since 1998, the recorded music market has recorded an increase by 11% of its sales.

Revenues from streaming services, such as Spotify, Deezer or Apple Music, accounted for more than half of all music sales and all of that growth. Not only is the future firmly in continuous listening, but the formula of the subscription is proof of its power. The advertising amounts on these same platforms were 5 times lower than those from subscriptions. The road is traced and Universal, which already draws a third of its streaming sales, intends to force Spotify to accelerate in this field.

But it’s also in the interest of the Swedish company, which in 10 years has become the leader of the American market before Apple even if the start-up has never earned money, despite its 50 million subscribers, and needs funds. Its ambition is to go public on the stock market by next summer. It must therefore demonstrate that the war is over with the giants of the sector and that, thanks to it, this industry, the first entry in the great washing machine of the Internet, is going to finish with the black years.

Alexandre Papazian is the founder & CEO of Soundlr. Former COO of Radio FG USA, he has also founded WEMAKEMORE, an international consulting agency of cutting-edge thinking on business issues in electronic music’s industry.

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