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The four types of music subscription models in 2019.
Posted By : Alex Powell
|
Posted Date : January 28th, 2019
There's a widespread perception that paid streaming subscriptions have become recorded music's lifeline, restoring the sector to a state of growth and driving its ongoing global expansion.

In fact, the influence of paid music streaming is so powerful that the word 'Spotify' now serves as a shorthand across several industries for a supposedly more convenient, streamlined user experience built on content aggregation: think 'Spotify for news', 'Spotify for audiobooks', even 'Spotify for comics'.

Capitalizing on this positive association, both Universal Music Group and Sony Music Japan are also reportedly building their own streaming products, part of which is likely to revolve around individual artists.

But while a subscription model might be the new table stakes for staying competitive, it's certainly not sufficient for success - and the music industry presents an exemplary case study.

Consider how Spotify and Apple Music continue to grow at an accelerating pace, but the likes of YouTube Music and Tidal are falling far behind.

Or how major labels have repeatedly tried to launch and maintain their own shared streaming services over the past few decades, to no avail (remember Pressplay and MusicNet?).

Or how even the biggest celebrities with tens of millions of followers have difficulties maintaining their own branded subscription apps.

In all of the above examples, companies either mischaracterize the kind of work that goes into running a subscription business or wrongly assume that the brand value and user loyalty of a company like Spotify or Napster is easily transferable merely by stealing their business model.

In reality, taking on a subscription model in music will work only if the added benefits align with the core value that the product in question has already been delivering to its most loyal users.

With this approach in mind, there is a diversity of subscription services that can thrive in the music industry in 2019, beyond just the all-you-can-eat, pro-rata-payment Spotify model - with the proper execution.

We can divide this emerging landscape of subscriptions into a four-tiered pyramid, pictured below:

The boundaries of these four categories are permeable and imperfect, but the most important takeaway is that moving up and down the pyramid means making tradeoffs on metrics.

Subscription services further up the pyramid attract relatively smaller audiences with a higher degree of loyalty to a given artist. In contrast, those further down the pyramid attract much larger audiences but tend to face more fleeting attention spans and listening habits from consumers.

To read more about each individual streaming service & their models, head to Music Business Worldwide.

 

Next Article : Looks like Spotify Is Preparing to Launch in India on January 31st

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