I reminisce fondly on the heyday of music downloading, back when P2P file-sharing applications like Napster, Kazaa and Limewire were all the rave. Ignoring the bundles of spyware that plagued your computer upon installation, it was marvelous how easily (and illicitly) you could download your favorite songs as MP3s.
There was nothing better than jamming out to your favorite beats while AIMing with your buddies, or better yet, burning a fresh mixtape CD! Ah, those were the glory days, indeed. My, how personal music consumption has been disrupted by tech.
Thanks to technological innovations of cloud computing and mobile devices, we find ourselves living in an age of digital streaming, where masses of consumers are paying to stream libraries of music and video content, rather than outright purchasing and/or illegally downloading specific titles. And while piracy still remains a massive issue for the music and movie industries – virtually anyone with a computer and an Internet connection can illegally download digital content through torrents – industry trends indicate that consumers are willing and able to fork over a clean sum of $10/month for unlimited music streaming.
When it comes to digital content streaming, much can be said about Netflix’s success over the past decade in the video space, having surpassed 75M subscribers across 130 countries. By developing and scaling a cloud-based video streaming service (with a heavy investment in original content) that caters to today’s cross-device digital landscape, Netflix forged the model for building an on-demand, open buffet-style, content streaming business. As a result, Netflix has shot well ahead of competitors like Amazon and Hulu, and now competes directly with paid subscription media titans like HBO.
The streaming model has gained so much traction that a handful of my friends who list “Netflix and Chill” as a primary pastime have cut the ole cable cord entirely, opting to binge-watch their favorite shows sans ads. I personally couldn’t imagine parting ways with an HD cable setup with the NBA playoffs right around the corner, though perhaps I’ll start considering an a la carte option as cable providers bring more options to market.
Whereas Netflix has emerged as the video streaming frontrunner (with Amazon, Hulu and HBO making moves to catch up), the music streaming race is far from decided. The high-stakes contest is packed with deep-pocketed tech heavyweights like Apple (through a $3B acquisition of Beats), Spotify and SoundCloud (sorry Tidal, nobody likes you), each striving to please investors with equally ambitious marketshare goals.
As these major players aggressively vie for marketshare (Spotify reports 30M paid subscribers, Apple Music 11M, while SoundCloud boasts 175M monthly listeners), it’s worth understanding what their current offerings are, in terms of price and product differentiation.
SoundCloud Go: $9.99/month – ad-free access to over 125M tracks, including both major-label singles and albums, plus all of the user-uploaded content exclusive to SoundCloud: indie recordings, remixes and DJ sets.
Note: for the purposes of this post, I’ve decided to exclude Pandora’s music streaming service, Pandora One ($4.99/month), primarily based on their key product difference that users are unable to play specific tracks on-demand, but rather stream ad-free music stations. Pandora may also be facing rough waters ahead. For an in-depth analysis of Spotify and Apple’s streaming offerings, check out Digital Trends’ analysis.
From afar it may appear that Apple, Spotify and SoundCloud essentially offer the same product at the same price; ad-free streaming access to a massive library, all for a bite-size $9.99/month.
But last week SoundCloud made a major move in the music streaming wars by inking deals with the major labels and launching their own ad-free, paid subscription service that combines all of the underground audio content that music junkies like myself listen to, plus all the major label tracks that you’d find on Spotify and Apple Music.
For underground music enthusiasts, SoundCloud gives you the whole kit and caboodle. Writes Fred Wilson, famed New York VC, of SoundCloud Go‘s music library:
SoundCloud Go is the ultimate music service, giving listeners access to 125 million tracks from all over the world, offline or online, and ad-free. For comparison, traditional music subscription services, like Spotify and Apple Music, offer access to roughly 35 million tracks and internet radio services, like Pandora, offer access to roughly 2 million tracks.
To put that in perspective, if I want to listen to an up-and-coming artist such as Montreal-based producer Kaytranada on Spotify, I’m limited to Spotify’s selection of 10 licensed tracks. Conversely, Kaytranada’s SoundCloud page contains his entire discography of 50+ tracks and remixes. From there, I could listen to Kanye’s entire discography (including The Life of Pablo – sorry Tidal), along with the plethora of Kanye remixes released worldwide by DJs large and small. It’s a music lover’s playground.
SoundCloud entering the streaming arena ensures that Spotify and Apple will continue to advance their platforms with stronger features and deeper catalogs. Writes Fast Company’s John Paul Titlow, “features like music discovery and exclusive content are what’s going to set these services apart from one another.” It remains to be seen whether SoundCloud’s much-improved catalog will be enough to sway existing users from Spotify or Apple Music. At the end of the day, it all comes down to access and discovery features.
For the major labels, it makes a ton of sense to license their artists’ song across Spotify, Apple Music, SoundCloud, Pandora, et al. Spotify reportedly pays out 80% of their revenues to the music rights owners. And while the major labels may not be selling boatloads of albums like they used to, and lose out on roughly 20% of the take, it’s infinitely better than everyone stealing your property with torrents.
As the next few years play out, we’re poised to witness a competitive bloodbath between the Big Three music streaming services. Marketing campaigns will continue to get more aggressive, the ads for non-paying users even more annoying in an effort to convert them to subscribers, and perhaps even a pricing war.
The sad truth is that while most people my age (er, Millennials) don’t think twice about ordering a round of brews at happy hour for $20, the majority of us aren’t going to pay a whopping $20 for two music subscription services. Most of us aren’t ambidextrous, and are only willing to pay for a single subscription. So which will it be: Spotify, Apple Music or SoundCloud?
Or, you could always take the frugal route and listen to unlimited, ad-free music on YouTube with an Ad Blocker…