Rhapsody’s co-chairmen pick a side in the Taylor Swift vs. Spotify debate.
As the first music-streaming service to be licensed by all major labels -- and the No. 2 on-demand music service in the United States -- it may surprise you to learn that we at Rhapsody support, and generally agree with, the decision by Taylor Swift and other artists to not make their new albums available on free streaming services immediately after release.
Why are we taking this stance? We think that Spotify’s apparent demand, that all its content be available in both their premium and free tiers, is overly simplistic and will not break the music industry’s decade-plus-long decline. Instead, we believe in a much more comprehensive approach that (a) differentiates between free services like Spotify and paid services like Rhapsody, and (b) is built on concepts like windowing and other ways to deliver value to both consumers and artists.
Before Swift's decision, most people didn’t understand the difference between free streaming services and paid ones. It's a big one: On Rhapsody, everyone who has full access to the 30 million-plus songs in our catalog pays for it, either directly or indirectly (for instance, through their mobile-phone service plan). On services like Spotify, many users aren't paying at all -- access to on-demand music is free.
There’s certainly a role for free ad-supported services -- radio has been around for more than 75 years, and the popularity of Pandora clearly demonstrates how robust this model is. But we have long thought that free, on-demand music is throwing the baby out with the bath water.
Windowing is clearly one way to differentiate free versus paid access. The fact that Swift is the first artist this year to sell more than 1 million copies of her new album in just one week demonstrates that the model can work, as it does in other areas of the media world. Most films open in theaters before moving to on-demand and TV. Hit TV shows premiere on the network that owns or underwrites them, then move to other distribution services.
The key to making consumers happy is consistency and exchanging value for value.
If 90 percent of new releases from established artists were only available at launch on paid services -- whether by purchase, or as part of premium subscription services, or through some new model -- then consumers would quickly come to understand that premium services are the way to get access to the latest music. The result would be a win-win: More artists would be paid reasonable rates for their music, aggregate industry revenue would rise, and consumers would get excellent, virus-free experiences and know what they were paying for.
We truly believe that streaming -- done right -- can be part of a future where recorded music is again a vibrant and growing industry.
This article first appeared in the Nov. 29 issue of Billboard.
How The Internet Has Affected The Music Industry
When Tim-Berners Lee dreamt up the, then, crazy idea, of an inter-global network, I'm sure very few people had the same optimism in believing that it could happen in the future.
Over the last ten years, the Internet has evolved from just web pages to e-mail, to online gaming, to viewing sport and film previews, and to buying and downloading music online. The Internet has now become one of the music industry's greatest markets, estimated to reach over 25% of sales in five years. This may be true, yet the Internet is also one of the music industries greatest enemies.
For some years now online shopping has been available to anyone with a credit card and an Internet connection. E-commerce retailers such as Amazon.com sell everything from garden tools, to C.D's and mini-discs. It is only in the last couple years however, that online shopping has taken off. Before this the public and businesses alike had not been taking full advantage of this phenomenal asset, which has been proven to save companies millions. It was only with the creation of Windows 98 and other Internet programs that people were sure that their credit card numbers and personal details could not be viewed by another person, or 'hacked'. Once this huge hurdle was overcome, the way we used the Internet and the effect it had on the music industry had changed forever.
The close relationship between the Internet and the music industry has led to many dramatic revolutions. First of all it has changed the way in which we purchase music. It has also opened up a new medium for record companies and musicians to promote their music, and now consumers can listen to music via technology such as RealAudio. Also, with peoples Internet connections getting faster all the time, and now with the invention broadband Internet, you can listen to music through Internet Radio Stations whilst still surfing the Internet, a new technique called 'streaming'.
From a consumers point of view this is all excellent news, and I am sure there is yet more to come. But from the music industry's perspective, not all of this new technology is helping their cause. Many areas of the music industry have been affected in a bad way, areas such as musicians and record companies worry about copyrights, songwriters and music publishers also worry about copyrights, and distributors and high street retailers worry about sales, and they should be worried as C.D shipments went down by 7% in the first six months of 2002. Copyrights are based on control of the market: how and when a copyright work is used. So the Internet has changed the foundations of the music industry. Because it is so easy and inexpensive to create a website, this makes it easy to put...
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