x Abu Dhabi, UAEWednesday 17 January 2018

Internet pioneers may be drowned out by big players

Streaming services have been around since the mid-2000s and have been racking up losses in their quest for global expansion.

Spotify has six million paying customers compared with 500 million for Apple iTunes. Above, the company's mobile app. Spotify Radio via AP Photo
Spotify has six million paying customers compared with 500 million for Apple iTunes. Above, the company's mobile app. Spotify Radio via AP Photo

Streaming services have been around since the mid-2000s and have been racking up losses in their quest for global expansion.

Industry insiders say the market pioneers may not be the ones who end up being successful. The big, commercially savvy tech houses Google, Amazon and Apple are planning to get in on the act and are already talking to recording industry executives, reports say.

They all face a quandary: how to generate enough revenue to make a profit without upsetting artists who are growing increasingly restless with the miniscule royalties being paid.

That is a serious risk to their corporate reputations - if streaming sites are labelled the new villains of the music industry, they could soon start looking uncool.

Here are some of the main players in the streaming market.

Spotify was set up in Sweden in 2008 and has 24 million registered users globally, six million of whom are paying subscribers. That is still dwarfed by Apple's iTunes customers with 500 million paying customers.

A pioneer in the market, and the biggest streaming service by user numbers, is US company Pandora, set up in 2005.

It is based on the "Music Genome Project", which created a software that uses a mathematical algorithm to predict a person's musical taste based on a single song or artist. Type in a song and it will predict other music you might like and it will create a personalized Internet radio station playing similar music.

Pandora does not allow access for listeners outside the US, Australia and New Zealand due to licensing constraints.

Pandora generates revenue from advertising and also offers a subscription service to listeners. The company announced in April that it had surpassed 200 million registered users in the US, up from 100 million in July 2011.

Despite its runaway growth, Pandora still does not make enough money to cover its costs including royalty payments. And artists are complaining those payments are far too low.

In June, songwriter David Lowery, the lead singer for the 1990s alternative rock band Cracker, complained Pandora had streamed his 1993 hit single Low more than 1.1 million times and paid him the grand total of US$16.89 in royalties.

Yet Pandora is now reportedly campaigning to lower royalty payments for songwriters even further. "I urge all songwriters to post their royalty statements and show the world just how terrible webcasting rates are for songwriters,' Lowery wrote on a post the songwriters' blog the Trichordist.

Pink Floyd has joined in the criticism. "Pandora is pushing the growth of its business directly at the expense of artists' paychecks," band members Roger Waters, David Gilmour and Nick Mason wrote in an editorial published in USA Today in June.

They said almost 90 per cent of artists who get royalties from digital play got less than $5,000 a year, and could not afford the pay cut Pandara was asking Congress to impose on the music community.

JUKE is a music streaming service based in Berlin. It says it has access to a music catalogue of more than 18 million songs. It offers a seven-day free trial period and then charges a monthly fee of €9.99. It is available in Germany, Austria, Switzerland, Belgium, the Netherlands and Italy. Like other streaming sites, it lets users set up their personal playlists and can be used on smartphones.

The US streaming service Rdio, launched in 2010 by the creators of online telephony service Skype, charges $4.95 monthly for listening on the desktop and $9.95 for mobile access.

The France-based Deezer, set up in 2007, says it has more than 10 million active listeners per month and offers access to more than 25 million songs in more than 180 countries.

Other services include German-based simfy, Xbox Music developed by Microsoft, Norwegian firm WiMP, and the U.S.-based, promisingly-named Grooveshark.

 

business@thenational.ae