Imagine sitting in a train. Take a look at the person on your left hand side. Meet Bob. You don’t know Bob, and you will never get to know Bob, as Bob is staring out of the window with his headphones on. Look straight ahead again. There is a couple sitting opposite of you, sharing a set of earphones and head-banging on music you cannot hear. At the back of the train, you suddenly see your friend Denise, and you call out her name; unfortunately, she does not seem to hear you as she is fully engaged in a new Spotify playlist she just discovered. You decide to pull out your headphones and put on the new album of Mumford & Sons.
Music is everywhere. Music has been everywhere for decades, yet recently, a new technological development disrupted the entire industry; streaming services. Companies such as Spotify, Rdio, Apple Music, Pandora and Tidal are all engaged in fierce competition to attract most paying customers. However, these companies face two problems. Firstly, although customers seem to grow very fond of music streaming services – almost 15 billion numbers were streamed in the United Kingdom in 2014 (The Guardian 2015), and United States music streaming revenues surged to over 1 billion dollars in the first half of 2015 (Statista 2015) -, these services still do not make enough revenue to become profitable. Secondly, artists do not love streaming services as much as users do. We all can recall the moment that Taylor Swift decided to withdraw her music from Spotify, and other artists as Beyonce and Ed Sheeran have also attempted to get around the influence of these streaming services. As can be derived from the ongoing discussion regarding streaming royalties, it seems that artists do not feel treated fairly by these businesses (The Economist 2015).
However, yesterday Pandora announced a takeover that might mark a change in the relationship between artists and streaming services. With its takeover of Ticketfly, an online concert ticketing service similar to Ticketmaster, Pandora will soon be able to directly sell concert tickets to music listeners. Whilst services as Pandora and Spotify were already promoting the sales of tickets through ads leading the listener to third-party websites, Pandora has now decided to move the entire purchase process to within its own ecosystem.
Pandora can use its experience in data collection to specifically target customers that might be interested in concert tickets from a certain artist. Apart from strengthening the ties between listening to music and visiting a concert hence increasing the music experience for users, Pandora also strengthens bonding with artists by this takeover. As concert tickets sales is still booming business (Techcrunch 2015) and has even become the main source of income for artists (Forbes 2015), artists will eventually be able to leverage the enormous user database of Pandora and even specifically target their ideal customer, without having to pay any additional promotion costs.
For Pandora itself, the acquisition of Ticketfly might also create more opportunities to generate revenue, and perhaps turn into a profitable business on the long-run. Pandora seems to have found a unique way to use its massive amounts of data to increase value for both parties simultaneously in its two-sided market, therefore increasing pressure on competitors such as Spotify and Apple Music.
Do you think that with this step, Pandora has revolutionised the music streaming service industry once again, ensuring that Bob can get involved even further with his favourite bands? Do other music streaming services have to follow? Or do you think there is another answer to low profits and weak bonds with artists?
The Economist 2015, The dry stream of musicians’ royalties. Viewed 9 October 2015. Accessible via <http://www.economist.com/blogs/prospero/2015/09/music-business>.
Forbes 2015, Pandora’s purchase of Ticketfly finally good news for shareholders. Viewed 9 October 2015. Accessible via <http://www.forbes.com/sites/bobbyowsinski/2015/10/08/pandoras-purchase-of-ticketfly-finally-good-news-for-shareholders/>.
The Guardian 2015, Streaming: the future of the music industry, or its nightmare? Viewed 9 October 2015. Accessible via <http://www.theguardian.com/technology/2015/jan/02/streaming-music-industry-apple-google>.
Statista 2015, Music streaming revenues surpass physical format sales. Viewed 9 October 2015. Accessible via <http://www.statista.com/chart/3852/us-music-industry-revenues/>.
Techcrunch 2015, Pandora Acquires Ticketfly for $450m to sell concert tickets. Viewed 9 October 2015. Accessible via <http://techcrunch.com/2015/10/07/pandora-acquires-ticketfly-for-450m-in-a-bid-to-sell-tickets-to-live-music-shows/#.db6ey8:pyx4>.
It´s not the first time that the German based company Aldi is tackling an industry with a low competitive price. This time it is the fast growing music streaming industry. What sounds like a curious sideline business could be a central element for changing the brand in the next years.
Two weeks ago Aldi launched on own music streaming platform in cooperation with Napster. For only 7.99€ per month, Aldi offers more than 34 million songs and audio books. At first it seems to be nonsensical to enter a highly competitive market in which already big competitors such as Spotify, Apple Music, Deezer or Ampya exist. And even that Aldi is cooperating with Napster has only limited benefits, as this brand is only partly known by the young target group.
However, Aldi has a good timing for this launch. The pioneer Spotify has demonstrated that music streaming in a performing and lucrative market. And Apple Music and Deezer are currently highly investing in advertisement and thereby keeping this topic continuously at customer awareness. This enables an opportunity for a low-cost provider.
Aldi has already proven in the past that they provide good multimedia products. In the hardware market they have a very fruitful cooperation with Medion, and in the mobile communication market AldiTalk is very successful as well. These two examples have shown that selling products or service at a low price but with high sales number can be profitable. Additionally, Aldi can use synergies and offer bundles, as mobile services as music streaming are closely connected. For example they can exclude the data volume for Aldi Life from the monthly data volume. Furthermore, they already have an existing customer (data) base. Therefore, the success prospects for Aldi Life are high and it is very likely that this discount strategy will be successful for music streaming as well.
This new tender is strengthening the retail competence within the field of digital and virtual products, a topic that is becoming more and more important in the future. Currently price and quality are the crucial factor which grocery story the customers favor. But, especially in the e-commerce these boarders are diminishing. Amazon Fresh is a good example: It is very likely that customers that had a good (service) experience are getting to know Amazon as a retailer much better then Aldi & Co.
For traditional retail companies the only counter strategy is the development of digital products and thereby getting contact to young customers who have high potential for their core business. And nevertheless, soon or later e-commerce is becoming a non-negligible topic for every stationary distributor.
Additional note: Aldi Life is currently not available in the Netherlands, but it is very likely that is will be available here so pay attention.
- Aldi Life (20159. Aldi Life. Available at: https://www.aldilife.de
- Campillo-Lundbeck. S. (2015). Warum sich der Discounter in der digitalen Welt so wohl fühlt. Horizont. Available at: http://www.horizont.net/marketing/kommentare/Aldi-life-Musik-Wo-die-Musik-bei-Aldi-wirklich-spielt-136540
- Kerksmann, C. (2015). Aldi wird zum Musik-Discounter. Handelsblatt. Available at: ewww.handelsblatt.com/unternehmen/it-medien/streamingdienst-gegen-spotify-und-apple-aldi-wird-zum-musik-discounter/12358744.html
- Vincent, P. (2015). Aldi teams with Napster to launch music streaming service. The Sydney Morning Herald. Available le at: http://www.smh.com.au/entertainment/music/aldi-teams-with-napster-to-launch-music-streaming-service-20150929-gjwwtp.html#ixzz3nV7aeukv Follow us: @smh on Twitter | sydneymorningherald on Facebook http://www.smh.com.au/entertainment/music/aldi-teams-with-napster-to-launch-music-streaming-service-20150929-gjwwtp.html
Online piracy is a big issue these days. Foundations like BREIN are hunting for uploaders and try everything to take down providers of pirated content, while music and film companies want internet providers to give them information about illegal downloads. Short: Piracy is EVIL.
Torrents is one of the main platforms for content sharing. Because of the huge amount of pirated content, Torrents is seen as evil by the entertainment industry and therefore music and film companies think they can earn more money by hunting down piracy.
Piracy helps music artists to become famous, because when it is free, more people will download your music and when they like it they might buy a ticket for your concert. That should be the new way of making money in the music world. For movies there is a nice example from 2007. Eric Wilkinson produced the movie “The Man from Earth” and didn’t have any money left to finance advertising. The movie was uploaded on Torrents, like almost every movie, before it got released on DVD. Many people downloaded this unknown movie and they loved it. These downloaders wrote overwhelming reviews about it and IMDB ratings of the movie went sky high, convincing other consumers to buy the DVD.
I think that companies in the music and film industry should accept that piracy can’t be banned, there will always be new ways for downloading illegal content. What they should focus on is finding new ways to earn money and use the valuable source of advertising that pirates actually can be. Because piracy is bad, right?
If you are living in The Netherlands and want to legally enjoy your digital music, there are plenty of solutions available. However, there is a good reason why so many people have not embraced one platform to fulfill all their music needs. Either the legal music platforms are not very user-friendly (e.g. restrict the user with DRM, unclear pricing, dramatic UI, insufficient music database, strange recommendations, advertisement policy) or divide the profits between them and the record labels as opposed to the artists.
In 2010 Spotify tried to fill this gap for Dutch users. With a rapidly growing global market share of 9.1% in 2010 and a market share of almost 20% of the global market for streaming services in 2011, it was bound to become the leading service provider in the industry in a few years.
But, as Elise Zonneveld pointed out, Spotify has trouble achieving profitability, despite its ever growing user base due to high royalty costs. Sound quality, limited supported formats and DRM are also not encouraging new users to convert to a premium account.
Do you remember Kim Dotcom? While this media mogul awaits the outcome of the increasingly scandalous efforts by the US and New Zealand governments to extradite him to face charges of copyright infringement, the founder of Megaupload is preparing to launch a new business line soon—a cloud music service called Megabox. Put top-notch programmers and designers in their natural habitat, feed them bacon and over-sugared energy drinks and something good has to come out.
Did you notice the sentiment analysis features and tight integration with all kinds of webservices? Looks promising doesn’t it?
Megabox: Music service or malware?
“These new solutions will allow content creators to keep 90% of all earnings and generate significant income from the untapped market of free downloads,” Dotcom told TorrentFreak. “I created an innovation that could solve the piracy problem.”
At first it looks like a promising new business model but the technical aspect gives it a sinister taste.
Technically, since users are made aware of what Megakey is doing and are willingly allowing the software to be installed on their computers, Megakey falls into the same legal realm as ad blockers. But once it is installed, users won’t necessarily know which ads are hosted on the sites they are visiting, and which are injected by Megakey. The ad injection mechanism of Megakey could also pose a major security risk to users.
If that isn’t enough to give the music industry and media companies a case of indigestion, Dotcom has also announced that he’ll be re-launching Megaupload later this year.
It is very common for people that enjoy listening to music a lot, to end up listening the same songs again and again with the inevitable result to end-up bored of them. The most common example would be at my case, when I make the mistake and use my favorite song as ringtone on my mobile phone, as a result, I can’t stand listening to it a couple of weeks later. To my surprise I came up with a new technology this week that promises to a new way to listen your favorites songs repeatedly, as the songs will sound different anytime you listen to them.
The idea came from the frontman of the group Golden Silvers, Gwilym Gold and came into life from the researchers of Goldsmiths University of London. The technology is called Bronze and it is programmed to change the components of each song in an infinite number of ways simulating a live performance experience. If you got interested and you want to find more about it, here is the official page of BRONZE.
I really looking forward to listen my favorite songs sound different every time and as the technology is currently availabe only to
- iPod touch second generation and above, iPhone 3G and above including iPhone 3GS, iPhone 4 and iPad in iPhone compatibility mode running iOS 4 or above.
- iPad: iOS 4.0 or above.
probably is the first time I wish I had an Apple product!