[This post was co-authored by FMC Communications Intern Scott Oranburg]
You may have heard the news that Universal Music Group (UMG) closed a deal with Spotify — the super-hyped and super-popular European streaming music service. UMG joins the ranks of EMI Music and Sony as three of the four major labels to license their copyrights with the service. Warner Music Group appears to be the holdout, but recent reports indicate that an agreement is on the horizon, and Spotify will soon make its hugely-anticipated splash in the US. (How anticipated? Well, consider that Spotify honcho Daniel Ek was teasing an imminent launch as far back as the 2009 Future of Music Policy Summit.)
With Google Music Beta, the Amazon Cloud Drive, Apple’s iCloud and now Spotify, it seems like there is a whole lot for musicians and listeners to wrap their heads around these days. We thought it’d be helpful to sort out all the offerings and let you know how they may impact musicians.
The US-based service with the most buzz so far is probably iCloud. Unlike Google and Amazon, Apple has deals in place with the major record labels. However, there is some uncertainty about what Apple’s iCloud will permit the company to do with these licenses. According to Steve Jobs’s keynote address and the Apple site, it seems that they will not initially offer any streaming service. Rather, Apple will make the music file-owning experience more seamless across all Apple products. Basically, any song you download from iTunes will now automatically download to all your Apple devices (up to 10 of ‘em). For example, if you download “Born This Way” onto your iPhone/iPod while waiting for the bus, you can also painlessly download it to your iPad (or Mac computer) later. Additionally, Apple is offering a “scan-and-match” service that scans your current music library and matches your songs with songs in the iTunes catalog. After doing so, you can download all of the “matched” songs onto all of your Apple devices wherever you are. That may sound cool for just $25/year, but to us, downloads are still pretty old school compared to streaming, on-demand services that give all-you-can-eat access to vast catalogs of music on pretty much any device. (There are several of these legal subscription services in the US: Rhapsody, Napster, MOG, Rdio, etc.)
In contrast to iCloud, to use Google Music or Amazon’s Cloud Drive, you must personally upload your music to their servers, and then you can stream that music from any broadband-connected device on the planet. It may take days or even weeks to upload one’s entire library, but after that you’re able to rock out anywhere. Google’s service is currently free (with an anticipated annual fee), while Amazon offers 5 GB for free but charges anywhere from $20-$1,000/year for additional space.
Now to the important stuff: How will might these new services impact musicians? Well, they won’t… not yet, at least. The “locker”-style cloud services might make it more fun/easy for people to purchase and collect music, which *might* inspire new purchases and therefore compensation for musicians. But none of them create any new revenue streams, so artists have no additional way to profit. (Apple may have paid the major labels a fistful of dollars, but it’s really tough to say how/when/if any of that money will make it to musicians.)
The picture might look different for streaming on-demand services like the ones we mentioned above (and that Great White Whale, Spotify). Spotify is supposedly launching Stateside this summer, which might shake the digital music space a bit. Spotify offers a fully interactive experience where users can have complete control over the entire Spotify catalog: Listeners can play, pause, rewind, and create/share playlists from the millions of songs Spotify offers. And, these features are available to any user, regardless of the music s/he currently “owns.” The European version of Spotify is “tiered,” with free listening (there are some limitiations and audio ads), as well as commercial-free, unlimited and mobile access for a monthly fee.
But even if this service gets huge in America, will it amount to a meaningful revenue stream for musicians? Spotify’s payouts to artists have gotten some negative press in the past due to low figures even for gajillions of plays. Still, a move to the US could help the company make more money and therefore pay out more to artists and other rightsholders. We just have to make sure that big bucks to record labels and publishers for high-falutin’ licensing deals also mean equitable revenue streams for artists.
We should also note that it’s pretty hard to believe that Apple doesn’t have streaming up its sleeve, to be unveiled when they sense competition from an on-demand listening service (like, say, Spotify). And, while Google and Amazon will likely miss out on this action due to not having any licenses in place with the labels, it would be foolish to count them out yet. The brass ring for digital music has yet to be fully grasped by any one company (although Apple seems to have come the closest).
We at FMC welcome all of these experiments, innovations and business models, so long as they fairly compensate the artists whose creativity powers them. To infinity and beyond, then…