Can an independent streaming music company survive?

By Chris Umiastowski on 12 Jun 2014 02:54 pm
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With Amazon now entering the streaming music game it has me wondering if any of the independent services will be able to survive long term.

Pandora, Spotify, Songza, Slacker and RealNetworks (via their Rhapsody service) all compete in this space. Google is rumoured to be looking at Songza, Apple just bought Beats and Amazon has launched their own service. With these three giants competing against the independents I have a feeling the ability to generate a profit by selling subscriptions services will become increasingly difficult.

The traditional business model is to offer a free service with advertising or other limitations, and upsell people to a $10/month subscription that gets rids of ads or whatever other nags exist. Thing is - most people are happy enough to use the free service and the number of users required to build up a significant advertising business is pretty huge.

I think the business model either has to evolve, or else Google, Amazon and Apple are going to dominate this space because they don't need to run profitable music streaming businesses out of the gate. Amazon can use it as a carrot to gain Prime subscribers and Apple can leverage it to sell more iOS and Mac hardware. Google and Apple might also be motivated by their respective efforts in car infotainment.

Out of all these services I prefer Songza because of its intuitive UI and human curated playlists. I've seen commentary from their executive team about selling advertising in a non traditional manner. For example, they could have a sponsor for a particular playlist geared to a hobby or time of year. They could present contextually relevant ads as well. This would be better than sending random ads to random people, but revenue would still depend on the size of your audience. With so many streaming music services it's go to be difficult to grow a huge audience.

What's your take? Do you think there is a business model for independent streaming music providers to make a buck? Or do they collapse under mounting pressure from the big boys?

Related: Music Editorial

Reader comments

Can an independent streaming music company survive?

2 Comments

The big boys are like Wal-Mart. Pushing the little guy out of the market. Me personally...I stream mostly podcasts. When I do listen to music it's Pandora, free. The adds don't bother me since the phone is in my pocket. Usually only listen to music when I'm on the motorcycle. I can't justify paying $10 for something I don't use that often. Now if someone came out with a $5 music service than I would opt in. If I read it correctly Amazon does not have some big labels. My kids were excited for Amazon but no TAYLOR swift so they said no. Lol

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I do hope Google buys Songza. I love the format but they are limited on music. I'd pay Google for that kind of service.

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