What if Music Streaming Collapses?

MOST critical coverage of Spotify, Pandora and the like has concentrated on the frustration of musicians. But a tough, provocative new piece asks, What if these streaming companies simply fail to make profits, and disappear? Here is Michael St. James — extending the recent David Carr story — on RebelMouse:

Not one of the music streaming companies has made a profit yet, not one. Most are involved in corporate growth quarterly suicide, driven by large sums of VC money, or public pressure to return shareholder value. That’s fine, but that’s no way to nurture a creative company. I wish them all well, but honestly, that doesn’t seem like a good situ220px-Daniel_Ek_addressing_Spotify_staffation for the industry or consumer, maybe the VCs and shareholders, and money managers, but not us.

Streaming is sort of the second (or third) wave of digital disruption. First came Napster and related piracy, then came paid downloads on iTunes and the like; both helped chip away at sales, though iTunes brings in some revenue. Streaming has continued the process: it earns some revenues, some of which reach musicians, but record sales and even downloads have fallen as that’s happened.

St James speculates what could happen next. “There is no guarantee that any of these companies will be around by the end of the year,” he writes. “I know that’s hard to believe, but they could, literally, just close up shop, count the money and go home.”

If that happened, it would be a bit like the the Border’s that came to town, wiped out your local indie bookstore, and then folded up itself a few years later. Or the Wal-Mart that arrived on the edge of your city and destroyed the mom and pops on Main Street. (In some cases, as Douglas Rushkoff has documented, the government, and your tax dollars, paid to knock down Wal-Marts that didn’t make it.) Digital disruption won’t discriminate — it will destroy just about anything in its path. It could be your favorite shop, or your job, next.


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  1. says

    Fascinating! I was just reading Chris Anderson’s “Free is the future” from 2007, in which he notes that newspapers had all abandoned their paywalls. Of course now the paywalls are back up! If anything is clear, it’s that we haven’t found a business model that selects quality music (and tv and film and literature) and puts it in the hands of audiences at a reasonable price. Eventually the disruption will stop (!?) and something will settle in, but whether it will be workable or just or right is an entirely different question….

  2. says

    Indeed — Mr. Wilkerson lays out the problem succinctly, I think. The waves of crises will likely (though not certainly) slow down, but it may not work out so well for the “content providers,” whatever their field.

  3. MWnyc says

    Scott, have you looked into Naxos Music Library at all? I know it’s not a freestanding enterprise like Spotify and Pandora are (or started out being), but I’d be interested to know if it’s losing money for Naxos. I suspect not. Lord knows just about every indie classical and world music label out there (except Hyperion) has been signing up to be part of it – and some of the majors, too.

  4. Carlo says

    What about NPR (National Public Radio) music? There are hundreds of stations available for streaming at no cost.

    • MWnyc says

      Those aren’t streaming-on-demand services. You don’t get to decide what piece you want to hear and then listen to it; you have to listen to whatever a given station happens to be broadcasting at the time. At best you can listen to programs they’ve kept in their archives for on-demand listening, but even then you’re limited to what that given station has programmed. It’s not the same as Spotify or Pandora or Naxos, which are basically very well-stocked libraries.

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