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Is Disney+ Musicians’ Latest Villain

With Disney+ and AppleTV+ joining the likes of Netflix, Crave and Amazon Prime Video this month, the number of paid on-demand video streaming services available in our home country of Canada is now getting a little crowded. With each service having their own exclusive content, it is becoming common for households to have more than one streaming video subscription.

Music can’t do exclusive

In the music subscription world we learned early on that exclusive content doesn’t make sense. Tidal, the platform that tried it the most, has now brought their exclusive Beyonce releases to all the other platforms.

Spotify’s Daniel Ek explains why music is different to video:

“The primary reason why we’re not doing [exclusive content] is because it doesn’t make sense for the artists… if you think about most artists today, the vast majority of their income is derived from touring – 80% or so. And, if that’s your business, then your core thing you would want to do is spread your music as wide as possible [to] create new fans that want to come and see your shows.

“The second thing is, because of how copyright laws are built, music, specifically, has a compulsory element, which means there are a lot of players out there, radio stations, etc. that don’t need to license every piece of content. They can rely on these statutory licenses and therefore use content. So even if we wanted to have content exclusively, we couldn’t prohibit radio stations or even YouTube for that matter, [from having] that same pieces of content… so the value of exclusivity just isn’t very high in music.

“And then thirdly, we would compete with our suppliers, which I generally don’t think is a great idea.”

Daniel Ek, Spotify

But what this means is that we have a world where consumers are increasing their monthly spend on multiple video subscriptions, yet the amount paid on music subscriptions is stagnant – households only have one audio subscription. Plus, since Spotify’s launch in Canada in 2015, the monthly rate per user has only come down from the $9.99 with the launch of family plans in 2016, when up to 6 people can share a plan for $14.99. It’s meant the payouts to musicians, on a per-stream basis, is in decline.

Music’s value loss

Many argue we are still in the early days of music streaming subscriptions, indeed, the IFPI’s Music Consumer Insight Report for 2018 has the number of Canadians accessing music streaming as 56%, behind the global average of 61%.

As such the primary goal, for many in our industry, remains to get people paying for a music subscription at all. There’s no denying this is important, with the ad-funded, low royalty rate model that YouTube uses being the dominant streaming platform for those 56% who do stream. (79% of Canada’s music streamers use YouTube, and according to Music Canada, that means that $550m in revenue is lost to the service yearly, instead of going to music creators and copyright owners – contrast this to Canada’s total recorded music revenue, which is only $572m).

However, with video taking up even more of every households income, the money available within a family to stream audio is declining, so people who aren’t already paying for audio subscription have even less money to consider it; YouTube’s low paying model will remain dominant.

Some good news?

As a musician then, it can feel like you’re being squeezed from above, as even those who do pay for music are paying less per stream than before, and below, as people have less disposable income to spend on music, they’re trapped only passing on what an ad-supported video view on YouTube will pay.

But there are some positive developments.

In 2018, Spotify started a trial 10% rate increase in Norway. Those prices are still in place, and this year they’re reported to be trying a 13% increase of family plans in Scandinavia. We need to bear in mind that these are markets where streaming is the predominant music consumption choice, so in a way there isn’t the ability to revert to physical in the way that Canadians would have thanks to the continuing existence of record stores across the country. But none-the-less, the idea that there could be price increases for music streaming on the horizon can only be good news for musicians, as long as it doesn’t impact subscriber numbers.

It will be interesting to see if Spotify would be willing to trial a rate rise in a country, like Canada, where they are not the absolutely dominant platform, and if they did, would Apple Music, and the others follow suit?

For now we can take some comfort in the increases the industry has seen in recorded music revenues since 2014, thanks largely to streaming. But this is the music industry, and just as in every good Disney movie, there’s always a villain. Thankfully though, the hero, or in our case music, will always break through and save the day; we just need to remember it’s true value. And if you’re thinking of adding Disney+ to your monthly subscriptions, we trust you’ve already got a premium music service in that list.

Heading: Is Disney+ Musicians' Latest Villain?
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